NikkoAM-Straits Trading China Electric Vehicles ETF files for IPO

BlueSG EV rental cars at a charging station in Singapore’s Geylang neighbourhood. Taken September 2021BlueSG EV rental cars at a charging station in Singapore’s Geylang neighbourhood. Taken September 2021

The NikkoAM-StraitsTrading MSCI China Electric Vehicles and Future Mobility exchange traded fund (ETF) has filed for an initial public offering (IPO) on SGX, with an expected listing date of 20 January.

The initial offer price is S$1.00 a share, the filing said.

The ETF will invest in Chinese companies expected to derive “significant” revenues from energy storage technologies, autonomous vehicles, shared mobility and new transportation methods, the filing said. The companies selected will be listed in the U.S., Hong Kong and China, and occasionally other markets, the filing said.

In promotional materials, NikkoAM, citing data from Allied Market Research, said the global electric vehicle (EV) industry is currently valued at US$250 billion, and is projected to triple to US$800 billion by 2027. China is the global leader in consumer acceptance of EVs, the materials said.

Investments will include some eligible China A-shares via the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, and potentially via the manager’s capacity under the QFI framework for China’s A-share market, the filing said.

The fund’s investments will track the MSCI China All Shares IMI Future Mobility Top 50 Index, with the weighting’s substantially the same, also known as a full replication strategy, the filing said. The manager might invest in some non-index securities which have aggregate characteristic, such as yield and duration, similar to index constituents, the filing said.

Securities will be capped at a maximum weight of 10 percent each, promotional materials said.

The shares will have Singapore dollars as the primary currency, with a stock code of EVS, and U.S. dollars as a secondary currency, with a stock code of EVD, the filing said.

Currently, the ETF has no distribution policy as dividends, interest income and capital gains for the Singapore dollar share class will be reinvested, the filing said.

The fund’s manager is Nikko Asset Management Asia, and its investment advisor is Straits Investment Management, the filing said.

The ETF’s management fee is expected at 0.50 per annum and its total expense ratio is projected at 0.70 percent per annum.

The initial offer period for the ETF is expected to close on 14 January, the filing said.

The top-ten index constituents as of 29 October 2021 are:

  • Contemporary Amperex Technology, an EV battery and energy storage systems maker, with at 12.64 percent weighting
  • NIO, a premium EV manufacturer, with a 9.71 percent weighting
  • Geely Automobile Holdings, an automobile maker with brands Geely, Geometry and Lynk&Co, with a 9.32 percent weighting
  • BYD Co. H-shares, an automobile manufacturer with businesses in EVs, energy storage and rail, with a 5.81 percent weighting
  • BYD Co. A-shares, an automobile manufacturer with businesses in EVs, energy storage and rail, with a 5.13 percent weighting
  • Eve Energy, a battery maker for EV and energy storage systems, with a 4.78 percent weighting
  • XPeng, a premium EV maker, with a 4.51 percent weighting
  • Jiangxi Ganfeng Lithium, a miner of lithium and manufacturer of lithium chemicals, with a 4.17 percent weighting
  • Yunnan Energy New Material, a maker of film products, including lithium ion isolation films, with a 4.04 percent weighting
  • Sungrow Power Supply, a photovoltaic inverter manufacturer offering power station system integration, with a 3.60 percent weighting

The index has had an annualized return of 44.1 percent since 31 May 2018, promotional materials said, but noted past performance isn’t necessarily indicative of future performance.