After experiencing several extreme market situations in these two months, some ETFs have made a deep impression, and the reason is also very straightforward: they have the potential to achieve a "20CM" move during moments of extreme sentiment.
What does "20CM" mean?
Let me explain first, "20CM" refers to the maximum fluctuation range that can reach 20%. This is also due to the trading rules of A-shares. Except for newly listed stocks, the mainboard has a fluctuation limit of 10%, while the ChiNext and STAR Market can reach 20%. Of course, the fluctuation limit in the Beijing Stock Exchange is higher, but we won't discuss that for now.
Naturally, everyone will understand that ETFs tracking the indices related to the ChiNext and STAR Market can achieve a fluctuation range of up to 20%. Such rules will amplify the volatility of the corresponding indices and ETFs during extreme sentiment moments.
For example, from September 24th to October 8th, in just six trading days, the ChiNext Index surged by more than 66%. The secondary market price of the ChiNext 100 ETF Huaxia, which tracks this index, also soared by 73%; however, from October 9th to 11th, in just three trading days, the ChiNext Index quickly plummeted by more than 17%, and the secondary market price of the ChiNext 100 ETF Huaxia also fell by 20% during this period (Note: The fluctuation range of the product's secondary market price is not equal to the fluctuation range of the product's net value). Therefore, when trading such ETFs, one cannot only see opportunities but also maintain vigilance against risks.
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The most representative indices
Let's also discuss in detail the three most representative broad-based indices of the ChiNext and STAR Market.
1. ChiNext Index
The ChiNext Index mentioned above is one of them. It is not equivalent to the ChiNext itself. The ChiNext Index consists of only 100 stocks, selected from the top 100 stocks in terms of total market value on the ChiNext.Moreover, the ChiNext Index, with less than 7.5% of the total number of companies in the entire board and a market value of nearly 5.59 trillion yuan, covers 50% of the total market value of the ChiNext board. Therefore, it has always been recognized as a broad-based index that can very well represent the ChiNext board. In the index industry weight, the top three are electric power equipment, pharmaceuticals and biology, and electronics, with these three industries accounting for nearly 60% combined. Here are the top ten major holdings of the index at present.
Let's talk about the STAR Market. Currently, the STAR 50 and STAR 100 are two representative broad-based indices of the STAR Market.
2. STAR 50 & STAR 100
The STAR 50 selects the top 50 stocks with large market value and good liquidity on the STAR Market, while the STAR 100 focuses on the midsection companies of the STAR Market, selecting 100 stocks with medium market value and good liquidity outside the STAR 50 sample as the sample. Therefore, the constituent stocks of the two indices do not overlap, and their relationship is a bit like that of the Shanghai-Shenzhen 300 and the CSI 500.
In addition to the complementary nature of the individual stock market value in the constituent stocks, the two indices also have different focuses in terms of industry.
More than half of the weight of the STAR 50 is concentrated in the electronics industry, focusing on the semiconductor field, and pharmaceuticals and biology account for 10%; while the industry distribution of the STAR 100 is relatively more dispersed, with pharmaceuticals and biology and electronics accounting for 27% each, relatively high. These are the top ten major holdings of the two indices, which you can collect and compare.
The ETFs tracking the above three indices are ChiNext 100 ETF Huaxia, STAR 50 ETF, and STAR 100 ETF Huaxia. Finally, I would like to remind you that the market has now entered a stage of increased volatility. The ETFs mentioned today are good tools for making rebounds, but don't forget that risks accompany opportunities. Only by correctly understanding the characteristics of the ChiNext board and the ChiNext Index can we better manage our positions. All investment actions should be carried out within our own risk-bearing capacity.
