Over-the-counter "Closed Door Thank You" On-site "Water Rises and Ships Rise" 52 QDII Funds Sound the Premium Warning

On March 2nd, Huatai-PineBridge Fund Management Co., Ltd. issued a risk warning again for its China-Korea Semiconductor ETF, alerting investors to the risk of trading price premiums in the secondary market. Trading was suspended from market open until 11:30 a.m. on that day. The company stated that if the premium in secondary market trading prices does not decrease, it reserves the right to apply for intraday temporary suspension or extension of trading halts. This marks the 63rd premium risk warning and the 22nd temporary suspension issued for this fund this year.

The hot market and soaring funds for the China-Korea Semiconductor ETF are also a reflection of this year’s cross-border investment boom in QDII funds. With funds being heavily speculated and fund prices soaring, frequent premium risk notices have been issued. According to data, as of the time of this report on March 2nd, a total of 52 QDII funds have issued premium risk warnings this year, with the China-Korea Semiconductor ETF being the most frequently mentioned.

Cooling Down the China-Korea Semiconductor ETF Suspension

How fierce has the rise of the China-Korea Semiconductor ETF been? According to iFinD data, as of February 27th, since its listing in December 2022, the net asset value (NAV) of the ETF has increased by 254.31%. Based on the NAV growth since inception, it ranks first among 214 similar funds. Since 2026, the fund’s NAV has continued to grow, rising 38.15% from the end of 2025 to 3.5431 yuan, with a circulating scale reaching 5.887 billion yuan.

The Q4 2025 financial report shows that stocks account for 98.1% of the ETF’s total assets. The top ten holdings and their proportions of the fund’s NAV are: Samsung Electronics (16.31%), SK Hynix (15.45%), Cambrian (7.95%), SMIC (6.83%), Hygon Information (5.80%), North Huachuang (5.53%), GigaDevice (3.98%), Lianchuang Technology (3.75%), Advanced Micro-Fabrication (3.24%), and OmniVision (2.96%).

As the only domestic QDII fund tracking the China-Korea Semiconductor Index, the continuous NAV increase is mainly driven by this year’s semiconductor sector rally and active Korean stocks. Specifically, since the beginning of the year, the Korean stock market has continued to rise, with the Korea Composite Stock Price Index (KOSPI) up 48.17% to 6,244.13 points. Many of the ETF’s major holdings have also seen significant gains, with Samsung Electronics up 68.48% and SK Hynix up 56.72%.

Compared to the substantial NAV growth, the secondary market trading prices of the China-Korea Semiconductor ETF have surged even more dramatically. In January 2026, the ETF’s secondary market price increased by 45.09% from the end of 2025 to 3.739 yuan, with a circulation scale growth of 1.371 billion yuan from the end of 2025. In February, the price continued upward, rising 13.83% from the end of January to 4.256 yuan, with an additional circulation increase of 845 million yuan.

In this context, the ETF issued 63 warnings about premium risks and 22 temporary suspensions in an attempt to “cool down” the market. Specifically, on February 27th, the fund’s NAV was 3.5431 yuan, while the intraday trading closing price was 4.256 yuan, resulting in a premium rate of 20.12%. Industry analysts note that high premiums essentially mean paying an excessive price for the same assets, which does not reflect the fund’s fundamental value. Investors are advised not to blindly chase the high premiums.

The Shanghai Stock Exchange also expressed concern over the price deviations and irrational chasing of funds related to the China-Korea Semiconductor ETF. On February 27th, the exchange reported on regulatory activities from February 24th to 27th, highlighting increased monitoring of funds with high premiums, including this ETF.

Can frequent premium risk warnings and temporary suspensions curb market speculation?

After the premium risk warning and temporary suspension on March 2nd, the ETF’s intraday trading prices showed signs of cooling. When trading resumed at midday, the ETF opened at 3.83 yuan, down 10% from the previous close on the 27th. Although it quickly rebounded, reaching 4.363 yuan at one point, it eventually closed at 4.103 yuan, down 3.59% from the previous close.

“Purchase frenzy” creates a bubble in intraday premiums

Behind the “crazy” intraday premium exceeding 20% is the continued enthusiasm of domestic investors investing abroad via QDII funds, which is closely linked to the strong performance of these funds. Data shows that the average increase of all QDII funds in 2025 was 21.67%, with Huatai-PineBridge Hong Kong Advantage Select Hybrid (QDII) A leading with a 112.69% increase.

In 2026, global markets have shown mixed performance. In the Asia-Pacific region, Japan and South Korea saw significant gains, with the Nikkei 225 up 15.33% and the Korea KOSPI up 48.17%. The Hang Seng Index increased slightly by 1.67%. In the U.S., the S&P 500 rose marginally by 0.49%, while the Nasdaq declined by 2.47%. European markets saw the CAC 40 up 3.56% and the DAX up 1.37%.

“QDII investors have clear needs for overseas asset allocation, and as Chinese households shift wealth from real estate to capital markets, this demand is expected to grow,” said a senior executive at a large public fund company in South China. According to data from the Asset Management Association of China, as of the end of January 2026, the total QDII fund size reached 1.03 trillion yuan, up 44.99 billion yuan from the end of 2025, marking the market’s entry into the trillion-yuan level.

However, domestic investors’ global asset allocation needs remain insufficiently met. In June last year, the QDII quota was expanded after 13 months, with an increase of $3.08 billion to $170.869 billion, mainly to ease the quota shortage for approved institutions. Soon after, QDII funds faced frequent restrictions, and now quota limits have become routine.

Taking the China-Korea Semiconductor ETF as an example, trading on March 2nd after the market reopened was still very active, with a turnover of 5.911 billion yuan and an 84.24% turnover rate. Meanwhile, off-market subscription for related funds has been suspended. On February 27th, Huatai-PineBridge China Securities Korea Exchange China-Korea Semiconductor ETF Connect Fund (QDII) announced a suspension of subscription (including regular fixed investments), with no notification of when it will resume.

Due to the inability to purchase high-performing QDII funds off-market, investors are increasingly turning to on-market trading, making the secondary market premiums more pronounced. Data shows that in 2026, 95 funds (including different share classes) issued premium risk warnings, with 52 being QDII funds. Among these, 10 funds issued more than 30 warnings this year, with 9 being QDII funds.

Industry insiders say that the frequent issuance of premium risk warnings and temporary suspensions for QDII funds aims to cool speculative behavior in the secondary market. They believe that the trading prices of QDII funds are influenced by NAV changes, market supply and demand, and other factors. When prices deviate significantly from NAV, investors who buy blindly risk substantial losses.

The “quota rush” and “premium surge” in QDII funds reflect a supply-demand imbalance. “The demand for global asset allocation is growing, but QDII fund quotas cannot meet the subscription needs,” said an industry expert. The China Securities Regulatory Commission previously discussed enhancing domestic institutions’ ability to allocate global resources during a “Fifteen Five” plan external capital forum. With ongoing market opening, foreign exchange quotas may gradually increase.