On September 7th, an important milestone was achieved in the realm of investment opportunities as the Bosera Shanghai Stock Exchange STAR Market 100 Exchange-Traded Fund (ETF), designated as the “STAR 100 Index ETF” with the fund code 588030, announced the activation of its fund contract. This ETF closely tracks the STAR 100 Index, and following a robust five-day subscription period, it was successfully closed on September 1st. During its fundraising phase, the STAR 100 Index ETF accumulated a remarkable net subscription amount exceeding 2.66 billion yuan, securing the top position among the four initial STAR 100 ETFs in terms of capital raised, showcasing its impressive ability to attract investment. The total number of effective subscription accounts reached nearly 34,000, enabling a broader spectrum of investors to share in the burgeoning benefits arising from China’s technological innovation and industrial restructuring.

Emerging as the second broad-based index on the STAR Market after the STAR 50, the STAR 100 Index has captured investor attention ever since its release in early August. This new index predominantly focuses on small and medium-sized technological enterprises, particularly the so-called "little giants" in the hard-tech sector, which emphasize innovation and advanced research.

The components of the STAR 100 Index mainly consist of companies with small to medium market capitalizations, generally categorized as leaders in specific sub-sectors of strategic emerging industries. The market capitalization distribution of these companies lies mainly between 5 billion and 20 billion yuan, with a median market capitalization around 12 billion yuan. Given the extensive development potential in their respective fields, these firms exhibit significant growth prospects. In this context, the STAR 100 Index complements the STAR 50 Index, providing a diversified array of investment options in China’s dynamic technological landscape.

From a sectoral perspective, the STAR 100 Index is concentrated in four principal areas: Next-Generation Information Technology, Biomedicine, High-end Equipment Manufacturing, and New Materials, collectively accounting for over 90% of the index's allocation. These sectors are expected to experience substantial growth and possess a high degree of certainty in terms of long-term development. The index is progressing towards increasingly emphasizing China’s “hard technology” sectors, reflecting a strong synergy between the capital market and technological innovation. This trend indicates mutual support and joint growth among these sectors, thereby enhancing the overall momentum of economic advancement.

Analyzing the long-term investment value of the STAR 100 index reveals its substantial advantages. The intensity of research and development (R&D) investments among its constituent companies is notably high, with R&D expenditures representing over 10% of their revenues in 2022, a stark contrast to the mere 2.3% for the broader market represented by the Wind All-Shares A Index. In technology-intensive emerging industries, sustained R&D investment is a critical factor for companies to maintain long-term competitive edges. By significantly investing in R&D, these companies can drive technological innovation, roll out new products, and expand into new markets, thereby supporting substantial future earnings growth. For instance, in the field of biomedicine, firms that consistently channel funds into research are capable of developing new drugs and therapeutic protocols that cater to evolving market needs, resulting in impressive revenue increases.

In light of recent market adjustments, concerns regarding the previously perceived high valuations in the STAR Market have significantly diminished. According to Tang Yibing, the fund manager of the STAR 100 Index ETF, while the overall valuation of both the STAR Market and the STAR 100 Index may not seem low in absolute terms, considering their industry characteristics and anticipated future earnings growth, the current valuation has reached a reasonable level. From a valuation model perspective, traditional evaluation methods may not suffice for high-growth technology companies; it is essential to incorporate future profit projections and broader industry development outlooks. The companies encompassed within the STAR 100 Index predominantly operate within emerging sectors, showcasing high growth potential. Upon considering these aspects, the present valuation levels exhibit favorable investment cost-effectiveness, positioning the STAR 100 Index ETF in a prime allocation window.

Since the beginning of 2023, the rapid advancement of artificial intelligence models has sparked a new wave of technological development, becoming a primary focus of contemporary investments. As the STAR Market celebrates its fourth anniversary, it has witnessed over 500 initial public offerings (IPOs) since its inception in 2019, securing cumulative fundraising exceeding 800 billion yuan. Each year, IPO fundraising on the STAR Market accounts for approximately 40% of the total across all listed boards. This trend illustrates the growing number of attractive, high-quality technology innovation enterprises launching on this platform.

Meanwhile, public mutual funds have also shown increasing interest and allocation towards the STAR Market. Against the backdrop of the accelerating digital economy and domestic alternatives, the launch of the STAR 100 Index and its respective ETF product will substantially contribute to the growth of public offerings focusing on the STAR Market theme. This development seeks to uncover investment opportunities in specific segments within the STAR Market and to better support the growth of emerging strategic industries and the real economy. Additionally, the STAR 100 Index ETF will enrich the available investment tools within the STAR Market, encouraging investors to leverage mutual funds for sharing in the bounty of high-quality economic growth, technological advancement, and industrial restructuring in China. This approach ultimately aims to enhance the preservation and appreciation of individual wealth amid the evolving economic landscape.