(Yicai Global) Sept. 21 -- Market observers expect the first batch of exchange-traded funds to track stocks such as Ant Group on Shanghai's year-old science and technology innovation board to be hugely popular with investors.

Four large fund companies, including China Asset Management and E Fund Management, will offer four Star 50 Index-linked ETFs worth a total of CNY22 billion (USD3.3 billion).

Investors can buy in for as little as CNY1,000 (USD148), or they can make cash bids for up to CNY5 billion (737.5 million) worth of each fund via online channels and in branches. The size is capped at CNY500 million (USD73.8 million) for share-based subscriptions at branches. The one-day subscription period is tomorrow.

The total value of shares on the Nasdaq-style board is expected to almost double to CNY5 trillion (USD737.5 billion) by the end of this year from CNY2.6 trillion as of July, an official at the Shanghai Stock Exchange said earlier this month. Companies lined up to join include fintech titans Ant Group and JD Digital Technology as well as Geely Automobile Holdings. Chipmaker Advanced Micro-Fabrication Equipment and software developer Beijing Kingsoft are already listed on the Star Market.

The Star 50 Index is the board's first benchmark, while the ETFs are the first passive funds to invest in the board. Their scarcity is likely to drive demand sky-high.

Still, investors should always be cautious. Star Market-listed companies have two characteristics -- potentially wilder volatility in business performance than players in traditional sectors and a 20 percent daily stock movement limit in the five days after the list -- that will be reflected in the Star 50 Index and the ETFs.

The Star 50 will fluctuate more widely than other board-based indexes, cautioned ICBC Credit Suisse Asset Management, one of the four fund companies, adding that investors need to form reasonable expectations as to the risk-returns of such products.
 

Editor: Ben Armour