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On July 22, 2024, when the Science and Technology Innovation Board celebrated its fifth anniversary of its opening, the total scale of the Science and Technology Innovation Board's theme funds has exceeded 220 billion yuan.

From 2019 to 2024, it is a highly concentrated cycle. While many "hard technology" companies on the Science and Technology Innovation Board have developed rapidly and achieved certain achievements, the overall valuation of the sector in the secondary market has reached a historical low with continuous adjustments. The "Eight Measures for the Science and Technology Innovation Board" that came with the fifth anniversary have awakened some new expectations in the capital market.

According to a research report by Industrial Securities, as of July 19, 2024, the allocation ratio of active equity funds (including ordinary stock funds, equity mixed funds, and flexible allocation funds) to the Science and Technology Innovation Board was 9.76%, a decrease of 0.11 percentage points from the first quarter of 2024, but the over-allocation ratio of the Science and Technology Innovation Board increased from 3.20% to 3.39%.

According to Wind data, as of July 19, 2024, the total size of the Science and Technology Innovation Board theme funds was 221.917 billion yuan. In addition, unlike the overall net redemption in the first quarter of 2024, during the second quarter, 126 Science and Technology Innovation Board theme funds received net subscription shares of up to 13.293 billion shares.

Many fund managers said that after nearly three years of adjustment, the valuation of the Science and Technology Innovation Board has fallen back to a historical low, and the risk has been significantly released. If the overall market recovers in the future, the medium- and long-term investment value of the Science and Technology Innovation Board will be highlighted, and it is expected to bottom out and rebound, at least it will usher in structural opportunities, especially for leading companies with strong science and technology attributes.

In the second quarter, the Science and Technology Innovation Board theme funds received net subscriptions of over 13 billion shares

According to a research report by Industrial Securities, as of July 19, 2024, the allocation ratio of active equity funds (including ordinary stock funds, equity mixed funds, and flexible allocation funds) to the Science and Technology Innovation Board was 9.76%, a decrease of 0.11 percentage points from the first quarter of 2024, but the over-allocation ratio of the Science and Technology Innovation Board increased from 3.20% to 3.39%.

On April 22, 2019, seven public funds, including E Fund, China Asset Management, China Universal Asset Management, ICBC Credit Suisse Asset Management, Southern Fund, Fullgoal Asset Management, and Harvest Asset Management, took the lead in launching seven Science and Technology Innovation Board-themed "seed funds". It has been more than five years since they were approved, and the team of science and technology innovation theme funds has continued to grow.

According to Wind data statistics, as of July 19, 2024, the number of Science and Technology Innovation Board theme funds has reached 126 (only the initial funds that have been established are counted, the same below), mainly including funds whose investment targets are components of the Science and Technology Innovation Board, with a total scale of 221.917 billion yuan.

Among them, there are 36 sci-tech innovation board themed ETFs with a total scale of 175.938 billion yuan, tracking the mainstream sci-tech innovation board indexes including the sci-tech innovation 50 index and the sci-tech innovation 100 index. Specifically, the top three ETFs with the largest scale are Hua Xia SSE sci-tech innovation board 50 ETF, E Fund SSE sci-tech innovation board 50 ETF, and ICBC Credit Suisse sci-tech innovation ETF. As of July 19, the latest scales were 71.613 billion yuan, 35.351 billion yuan, and 7.902 billion yuan, respectively.

As of July 19, there are 18 Sci-Tech Innovation Board-related theme funds that have been established for five years. According to Wind data, all products have achieved positive returns since their establishment. Specifically, E Fund Technology Innovation ranks first with a return rate of 117.70% since its establishment, followed by Southern Technology Innovation A and Fuguo Technology Innovation, with returns of 70.13% and 22.40% respectively since their establishment.

On the other side of performance, so far this year, among the 18 Science and Technology Innovation Board-related theme funds that have been established for five years, only four products have achieved positive returns, and more than 70% of the products have lost money.

Source: The Paper reporter based on Wind data statistics

In terms of subscription and redemption, according to Wind data statistics, unlike the overall net redemption in the first quarter of 2024, during the second quarter, 126 Science and Technology Innovation Board theme funds received net subscription shares of up to 13.293 billion shares.

Among them, Hua Xia SSE Star 50 ETF and E Fund SSE Star 50 ETF received net subscriptions of 4.851 billion and 3.324 billion shares respectively, while GF SSE Star 50 ETF, Harvest SSE Star Chip ETF and ICBC SSE Star 50 ETF also received net subscriptions of over 1 billion shares.

Source: The Paper reporter based on Wind data statistics

How to attract high-quality companies and screen out potential science and technology enterprises will be the focus

"Since the inception of the Science and Technology Innovation Board, we have paid close attention to the companies listed on the Science and Technology Innovation Board. At that time, there were few companies and few investable targets, so the proportion of holdings was not high. As the contribution of technological innovation to economic vitality in the economic structure has gradually increased, the Science and Technology Innovation Board has also gradually expanded, with more and more companies and industries joining, and the number of investable targets has gradually increased. It is for this reason that we are also increasing our attention to research on the Science and Technology Innovation Board. In addition, the accumulated experience of investing in the Science and Technology Innovation Board, as well as the accelerated growth of some high-quality companies on the Science and Technology Innovation Board, have also given us confidence in investing in the Science and Technology Innovation Board." said Dong Li, deputy director of the research department of Industrial Securities Global Fund and fund manager.

Dong Li believes that, in general, in terms of changes in the investment ecology of the Science and Technology Innovation Board, first of all, it is definitely receiving more and more attention from institutional investors; secondly, in terms of the research methodology of the Science and Technology Innovation Board, institutional investors are also becoming more mature; finally, the Science and Technology Innovation Board has activated the ecology of the entire market, more effectively met the capital market's demand for capital allocation, and provided funds to companies that need it.

"The Science and Technology Innovation Board has effectively guided the shift in the direction of asset allocation." Xiao Ruijin, assistant investment director and fund manager of the Equity Investment Department 4 of Bosera Fund, also pointed out that before the establishment of the Science and Technology Innovation Board, the overall market value of the A-share science and technology innovation sector was not large, and the market lacked public fund products that specifically invest in the science and technology innovation industry.

Xiao Ruijin further said that after the establishment of the Science and Technology Innovation Board, with the support of public fund managers, a number of science and technology innovation public funds were established and successfully issued. On the one hand, it provided individual investors with important tools for investing in the science and technology innovation industry, and on the other hand, it also created better returns for investors, effectively guiding the allocation of social funds to gradually shift to the science and technology innovation industry, and strongly supporting the healthy development of the real economy in the science and technology innovation industry.

Looking ahead, Sun Lijun, co-head of UBS Securities' global investment banking department, believes that how to attract high-quality companies and screen out potential science and technology companies will be the focus. He pointed out: "The Science and Technology Innovation Board has established a comprehensive supporting system from policies, systems to funds. In terms of specific implementation, we suggest that more attention should be paid to identifying the technological content of science and technology innovation companies, and more tolerance should be given to growing science and technology innovation companies, including unprofitable companies, and the Science and Technology Innovation Board and science and technology innovation companies should be viewed from a longer time dimension. As national policies continue to guide and promote scientific and technological progress, more companies that lead the technological trend will surely emerge."

So, how to find good companies in the Science and Technology Innovation Board? Song Weiwei, the proposed fund manager of the China Europe SSE Science and Technology Innovation 100 Index, said that specifically, there are three main points: First, look for listed companies with "hard technology" attributes. Second, look for targets whose business and technological breakthroughs can bring huge profit elasticity in the foreseeable future. Third, pay attention to opportunities for mergers and acquisitions. Mergers and acquisitions of high-quality assets will bring upward catalysts to the stock prices of related listed companies.

Wang Guizhong, director of big technology research at China Asset Management, believes that it is necessary to focus on the three essential human needs of "information, energy, and life", and build an investment portfolio from four steps: direction, rhythm, company, and valuation. We can focus on the five major directions of semiconductors, digitalization, new energy, Internet platforms, and innovative drugs, and explore high-quality companies from six dimensions: space, competition, business model, management, growth, and market expectations.

We are optimistic about the subsequent policy reforms and support for humanoid robots, satellite internet, and intelligent driving

On the occasion of the fifth anniversary, looking back, the birth of the Science and Technology Innovation Board is the implementation of many beneficial explorations in the past; looking forward, the development of the Science and Technology Innovation Board shoulders the mission of achieving another surge in my country's factor productivity.

When asked about the subsequent reform measures, Zhang Yun, general manager of the Index and Quantitative Investment Department of Yongying Fund, said that he is very optimistic about the subsequent policy reforms and support in the three areas of humanoid robots, satellite Internet, and intelligent driving. At present, driven by the cost reduction of commercial mass production, my country's humanoid robots are expected to replicate the global competitiveness of new energy, and Chinese manufacturing companies with large value and good positioning have advantages in the hardware side.

Zhang Yun further explained that in the field of satellite Internet, which is a "competitive battleground", my country has successfully applied for three large-scale constellation plans with more than 10,000 satellites, and the construction of satellite networks is accelerating. The application of intelligent driving technology is an important pillar of intelligent manufacturing, an important scenario for smart cities, and one of the important ways to create new quality productivity. "Recently, with the guidance of policies and the implementation of pilot enterprises and cities, the high increase in orders for driverless online ride-hailing vehicles has triggered the theme of 'car-road-cloud'. The car-road-cloud industry chain has been gradually improved and is about to enter the stage of commercialization and large-scale application. Everyone can pay more attention to the investment opportunities in the huge car-road-cloud integrated industry."

Song Weiwei said that in the short term, attention should be paid to the possibility of mergers and acquisitions in various industries. The most likely industries are semiconductors, military industry, and pharmaceuticals and biology. For semiconductors, nearly half of the mergers and acquisitions cases on the Science and Technology Innovation Board in the first half of 2024 occurred in the semiconductor industry. In the future, attention will continue to be paid to individual stock opportunities for mergers and acquisitions in the semiconductor industry. In addition, the third phase of the Big Fund was established in May this year with a scale of 344 billion. In the future, the investment direction of the third phase of the Big Fund will be an important field of domestic substitution in the semiconductor industry.