Oil and gas ETF premium exceeds 27% and faces suspension again, as frantic capital inflows trigger hundreds of billions in trading volume

[Source: Global Network]

[Global Network Finance Comprehensive Report] On March 26, the S&P Oil and Gas ETF from Fuguo resumed trading after being suspended for one hour, with the premium rate quickly surpassing 27%, prompting another temporary suspension at noon; the turnover rate of the S&P Oil and Gas ETF from Harvest surged to 581.49%, with multiple crude oil LOF products’ premium and discount rates exceeding 40%.

In the morning of March 26, the S&P Oil and Gas ETF from Fuguo resumed trading after an hour’s suspension, but the premium rate still quickly exceeded 27%, failing to return to a reasonable range. Fuguo Fund issued an urgent announcement at noon, stating that after applying to the Shanghai Stock Exchange, the fund would implement a temporary suspension from the afternoon opening until the end of the trading day.

According to Wind data, by the close of trading, the S&P Oil and Gas ETF from Fuguo increased by 1.59%, and even with limited trading hours, the transaction volume still exceeded 2.07 billion yuan, with a turnover rate reaching 164%; its IOPV premium and discount rate reached 27.28%, making it the ETF product with the highest premium rate of the day. As of March 26, the IOPV premium and discount rate of this product had remained above 25% for three consecutive days.

Similar products are also caught in irrational speculation. The S&P Oil and Gas ETF from Harvest increased by 6.62% on the same day, with an IOPV premium and discount rate maintained at around 14%, and total transaction volume reached 13.367 billion yuan, nearly a 66% increase compared to the previous day, with the turnover rate soaring to 581.49%, indicating the intensity of capital speculation.

In addition to cross-border ETFs, multiple LOF products linked to crude oil and the oil and gas industry have even higher premiums. On March 26, the premium and discount rates of the crude oil LOFs from Efund, Harvest, and Southern all exceeded 40%, with single-day turnover rates exceeding 100%. The Southern crude oil LOF also faced a temporary suspension due to high premium issues from the afternoon opening on March 26 until the close.

In the face of persistently high premiums, Wind data shows that as of March 26, there have been over 560 premium risk warning announcements in the past month, of which more than 90% are international QDII products, with some products even reminding investors of “significant losses possible with high premium purchases” on every trading day.

Even with continuous risk warnings, there has not been a significant reduction in investor enthusiasm, and funds continue to flow in. Taking the S&P Oil and Gas ETF from Harvest as an example, since March 10, there has been a net inflow of over 10 million yuan each trading day, accumulating 228 million yuan in the past month.

The fund’s reimplementation of a suspension in the afternoon is not a standard operation. “Generally, there is no suspension during trading hours; whether to operate this way depends on each manager,” a person from a fund company with related products told Yicai. According to relevant risk control standards, risk warnings and temporary suspension announcements apply if the closing premium rate of an ETF exceeds 10% or if the closing premium rate of an LOF exceeds 20%. (Chen Shiyi)