NikkoAM-StraitsTrading China EV ETF stumbles on debut

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 ETF made a weak trading debut on Thursday, falling from its initial public offering (IPO) price. 

The ETF was trading at S$0.963 at 2:39 p.m. SGT, down from its S$1.00 offering price. 

The fund’s investments will track the MSCI China All Shares IMI Future Mobility Top 50 Index, with the weighting’s substantially the same.

According to its offering filings, 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 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.

On Thursday, SGX noted the ETF, which has S$45.4 million in assets under management, will be the first ETF listed on the exchange to benchmark to electric-vehicles sector. 

Michael Syn, head of equities at SGX, said in a statement Thursday: “Long-term, structural trends within China, fueled by the powerful combination of technology and sustainability, can drive significant growth potential for this ETF.”

Eleanor Seet, president and head of Asia ex-Japan for Nikko Asset Management, said the ETF broke new ground as a thematic asset class which is needed for China to reach its carbon neutral goals by 2060.

“Electric vehicles and future mobility solutions will change our world and lives indelibly, help make our future more sustainable, making this a compelling investment for investors globally to consider,” she said in the statement.

To be sure, the ETF faced some stiff competition for investors’ attention on Thursday as the IPO of Vertex Technology Acquisition Corp., or VTAC, the first special purpose acquisition company (SPAC) to list in Singapore, made its trading debut on the same day.