Chinese ETFs investing in US stocks cap subscriptions as they run out of quotas
GF Fund and E Fund have capped daily subscriptions at 10 yuan, while China Asset Management has stopped accepting new subscriptions
China-listed exchange-traded funds (ETFs) targeting US stocks are capping new subscriptions, as strong demand from investors seeking diversification puts these products within striking distance of using up quotas granted by the regulators.
The nation’s biggest mutual fund firms that manage ETFs tracking the S&P 500 and the Nasdaq 100 index have imposed the restrictions, with these funds’ sizes approaching their respective quotas on overseas investments approved by the government. GF Fund Management is limiting subscriptions by an individual investor to 10 yuan (US$1.42) a day for its Nasdaq 100 ETF, with E Fund Management implementing the same curbs. China Asset Management stopped accepting new subscriptions since late November.
The spike in interest in US stocks underscores the diversification needs of Chinese households’ record 163 trillion yuan in savings, as the domestic equity market faces uncertainty and the property market continues its downtrend. Wall Street firms have predicted a third consecutive annual gain for US stocks next year, propelled by a continuing boom in artificial intelligence and further monetary easing.
“The resilience of US stocks is expected to carry into 2026 and the key driver will come from earnings growth,” said Zhang Yidong, an analyst at Industrial Securities. “In a base-case scenario, the AI narrative will deliver on earnings as the economy engineers a soft landing and the Federal Reserve cuts interest rates twice.”
He expected a 12 per cent gain for the S&P 500 next year, and the possibility of a further upside if the Fed reconciled with the Trump administration by delivering four rate reductions.