(Yicai) July 4 -- Chinese individual investors are chasing stocks listed on overseas markets, which they can access through qualified domestic institutional investor funds, despite repeated warnings about the risk from high premiums at a time when major foreign markets are scaling new heights.

The Invesco Great Wall Nasdaq Technology Market Cap Weighted Exchange-Traded Fund, which tracks the Nasdaq 100 Index, was still popular with investors even after trading was halted for an hour yesterday following a warning about the premium, which was 15.1 percent as of the market close, the highest among China’s QDII funds.

The warning was the 83rd issued for the ETF since the start of the year. Its premium to the value of underlying securities remained above 15 percent for 10 straight days as of yesterday, and even exceeded 20 percent on July 1. Other QDII funds had issued more than 580 warnings this year as of yesterday.

Due to the generally bullish stock markets abroad, nearly 70 percent of Chinese QDII funds have risen this year, and a fifth of the total have returned over 20 percent, performing significantly better than their peers focused on the domestic market, according to financial data provider Wind.

Investors have ignored the slew of warnings. Since May 31, the available quota of the ETF has increased by six million shares every day to reach 6.1 billion as of yesterday’s close, having more than doubled since early January.

The high interest in this ETF has been driven by a 34.2 percent return on investment since the start of the year, making it the best-performing mutual fund, and the assumption that the upswing will continue. 

The ETF’s top 10 constituents include US tech giants Nvidia, Microsoft, Apple, Facebook, Google, Broadcom, and Advanced Micro Devices, according to its first-quarter report. Their share prices have surged by an average of 39 percent so far this year, with that of Nvidia more than doubling amid the boom in artificial intelligence chips.

The gains in the Nasdaq 100 Index are mainly an AI-driven rally, according to Zhang Xiaonan, a fund manager at Invesco Great Wall. But higher valuations mean higher risk, so investors should prepare for more fluctuations, Zhang added.

Editors: Tang Shihua, Emmi Laine