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 suspensions or extend suspension periods. This marks the 63rd premium risk warning and the 22nd temporary suspension issued for this fund this year.

The hot market and surging capital flows in the China-Korea Semiconductor ETF are also a reflection of this year’s cross-border investment boom in QDII funds. With intense speculation and high fund prices, frequent premium risk notices have been issued. Data from reporters shows that as of 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 ETF’s net value has increased by 254.31%. Based on its net value growth since inception, it ranks first among 214 similar funds. Since 2026, the fund’s net value has continued to grow, rising 38.15% from the end of 2025 to 3.5431 yuan per unit, with a circulating scale reaching 5.887 billion yuan.

According to the Q4 2025 report, stocks accounted for 98.1% of the ETF’s total assets. The top ten holdings and their proportions of the fund’s net value 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 Equipment (3.24%), and OmniVision (2.96%).

As the only domestic QDII fund tracking the China-Korea Semiconductor Index, its continuous net value 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 up 48.17% to 6,244.13 points. Many of its major holdings, such as Samsung Electronics and SK Hynix, have also seen significant gains—68.48% and 56.72%, respectively.

Compared to the substantial growth in net value, 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 circulating scale growing by 1.371 billion yuan. In February, the price continued upward, rising 13.83% from the end of January to 4.256 yuan, with an additional 845 million yuan in circulation.

In this context, the ETF issued 63 warnings about premium risks and 22 temporary suspensions to “cool down” the market. On February 27th, the fund’s net value was 3.5431 yuan, while the intraday trading closing price was 4.256 yuan, with a premium rate of 20.12%. Industry experts 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 high premiums.

The Shanghai Stock Exchange also expressed concern over the deviation of prices from value and irrational chasing of gains in 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 price showed signs of cooling. It reopened at 3.83 yuan, down 10% from the previous close on the 27th. Although it quickly rebounded to 4.363 yuan, reaching a 2.51% increase, it then fluctuated downward and 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 domestic investors’ continued enthusiasm for investing abroad via QDII funds. The sustained market heat is closely linked to the impressive 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% rise.

In 2026, global markets have shown mixed performance. In Asia-Pacific, Japan and South Korea saw significant gains—Nikkei 225 up 15.33%, Korea Composite Index up 48.17%, while the Hang Seng Index increased only 1.67%. In the US, the S&P 500 rose slightly by 0.49%, while the Nasdaq declined 2.47%. European markets saw France’s CAC40 up 3.56% and Germany’s 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 from 981.6 billion yuan at 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, many QDII funds imposed purchase restrictions, making such restrictions commonplace.

For example, the China-Korea Semiconductor ETF, after resuming trading on March 2nd, remained active, with a daily turnover of 5.911 billion yuan and a turnover rate of 84.24%. Meanwhile, off-market funds have suspended subscriptions. On February 27th, Huatai-PineBridge’s China Securities Index Korea Exchange China-Korea Semiconductor ETF Connect Fund (QDII) announced a suspension of subscription (including regular fixed investments), with no announced reopening date.

Due to the inability to purchase high-quality QDII funds off-market, investors are turning to on-market trading, making the secondary market premiums more pronounced. Data shows that in 2026, 95 funds across the market 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 aims to cool speculation in the secondary market. They believe that the trading prices of QDII funds are influenced by factors such as net asset value changes and market supply and demand. When prices deviate significantly from NAV, investors’ blind buying can lead to substantial losses.

The “purchase restrictions” and “premium surges” of QDII funds reflect a fundamental supply-demand conflict: “Global asset allocation needs are growing, but QDII quotas cannot meet the demand,” said one expert. The China Securities Regulatory Commission previously discussed enhancing domestic institutions’ ability to allocate global resources during a “Fifteen Five-Year Plan” external capital forum. With ongoing market opening, foreign exchange quotas may gradually increase.