A simple way to invest in China’s AI hardware and technology stocks through SGX

This post was created in partnership with SGX. All views and opinions expressed in this article are Beansprout’s objective and professional opinions.

What happened?

When investors think about Chinese technology stocks, companies such as Alibaba and Tencent may come to mind first.

However, another part of China’s technology market has been gaining attention, including companies involved in AI chips, semiconductors, optical communications and advanced manufacturing.

This part of the market has been in focus recently, with memory-chip maker CXMT raising about US$8.6 billion through its STAR Market IPO in July, followed by AI-chip maker Enflame raising US$912 million before its Shanghai debut in September. 

Many of these companies are primarily listed on China’s domestic STAR Market and ChiNext Board, rather than alongside the Hong Kong-listed internet companies Singapore investors may be more familiar with. 

One way to access a basket of STAR Market and ChiNext-listed companies through the Singapore Exchange is the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY). 

In this article, I look at why China’s AI hardware and technology companies are attracting attention, how the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) differs from more familiar China technology exposure, what it invests in, how it has performed, and the key factors to consider before deciding whether this exposure has a role in a portfolio. 

What is the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) is an SGX-listed ETF that tracks the CSI STAR & ChiNext 50 Index.

The index consists of 50 large companies from emerging industries listed on Shanghai’s STAR Market and Shenzhen’s ChiNext Board. These include companies involved in AI computing, semiconductors, optical communications, electric vehicle batteries, renewable energy and advanced manufacturing.

Rather than directly holding all 50 shares itself, CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) operates mainly as a feeder fund. It invests at least 90% of its net asset value in the China Southern CSI STAR and ChiNext 50 ETF, which is listed on the Shenzhen Stock Exchange.

The 0.89% management fee is only one part of CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)'s overall cost structure. Its FY2025 expense ratio was 2.79%, including the weighted average expense ratio of the underlying fund. This means I would look beyond the headline management fee when comparing CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) with other ETFs. 

CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) is therefore not a broad China market ETF. Its exposure is much more concentrated in technology, innovation and advanced manufacturing.

How is CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) different from the China tech investors may already know? 

When Singapore investors think about Chinese technology companies, Alibaba and Tencent may be among the first names that come to mind.

These types of companies feature more prominently in the Lion-OCBC Securities Hang Seng TECH ETF (SGX: HST), which has greater exposure to internet platforms, e-commerce and consumer technology.

CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) provides exposure to a different part of the market.

In other words, I would not see CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) simply as another China technology ETF.

The businesses and economic drivers behind it can be quite different from the internet and consumer-facing companies many investors already associate with Chinese technology.

That also means the key question is not necessarily whether I already have “China tech” exposure, but what type of China technology exposure I already own.

What are the largest companies CSOP CSI STAR and ChiNext 50 Index ETF provides exposure to? 

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) provides look-through exposure to companies operating across different parts of China's technology and advanced-manufacturing ecosystem. 

As of 31 July 2026, the ten largest constituents of the underlying CSI STAR & ChiNext 50 Index accounted for about 63.6% of the index. 

CATL was the largest constituent at 11.26%, followed by optical-communications companies Zhongji Innolight and Eoptolink Technology.

This relatively high concentration means that although the index contains 50 companies, its performance can still be significantly influenced by a smaller number of companies and technology themes.

Unlike many better-known Chinese technology indices that are more heavily exposed to internet platforms and consumer-facing companies, the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) has greater exposure to the hardware and infrastructure supporting AI, digitalisation and electrification.

However, its relatively high concentration in the ten largest holdings means that the ETF’s performance may be influenced by a small number of companies and technology themes.

What parts of China’s technology ecosystem does CSOP CSI STAR and ChiNext 50 Index ETF provide access to?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) provides exposure to companies operating across different parts of China’s technology and advanced manufacturing supply chain.

These range from AI processors and semiconductor equipment to optical communications, batteries and energy storage.

To make the different businesses easier to understand, I will also draw broad comparisons with selected global technology companies operating in similar parts of the supply chain.

These comparisons are intended only to illustrate each company’s business exposure. They do not imply that the companies have identical products, scale, financial performance or competitive positions.

#1 - AI computing and semiconductor chips

Several of the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)’s largest holdings are involved in the chips and computing systems used to support artificial intelligence and data centres.

Cambricon Technologies designs processors and computing systems used for AI applications. Its role in China’s technology ecosystem can be broadly compared with Nvidia, although the two companies differ significantly in scale, products and market position.

Hygon Information Technology develops processors used in servers and data centres. Its business can be broadly compared with AMD, which also supplies processors for computing and data-centre applications.

Montage Technology designs memory interface chips and other components used in servers and data centres. 

These chips help processors communicate efficiently with memory, which is important when handling large volumes of data. Its business can be broadly compared with Rambus. 

#2 - Semiconductor manufacturing and equipment

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) also provides exposure to companies involved in manufacturing semiconductors and supplying the equipment used to produce them.

Semiconductor Manufacturing International Corporation, or SMIC, manufactures chips designed by semiconductor companies.

Its foundry business can be broadly compared with TSMC or Intel Foundry.

Advanced Micro-Fabrication Equipment Inc. China, or AMEC, produces equipment used in semiconductor manufacturing.

This includes equipment used in processes such as etching, where selected materials are removed from the surface of a semiconductor wafer during chip production.

AMEC’s role in the semiconductor supply chain can be broadly compared with global equipment manufacturers such as Lam Research.

Together, SMIC and AMEC offer exposure to two different parts of the semiconductor supply chain.

SMIC manufactures chips, while AMEC supplies some of the equipment needed to produce them.

#3 - Optical communications and AI connectivity

Zhongji Innolight and Eoptolink Technology were the second- and third-largest index constituents as of 31 July 2026. 

Both companies manufacture optical modules or transceivers that help move data rapidly between processors, servers and storage systems within data centres. 

The development of larger AI computing clusters has increased demand for faster connections because thousands of processors may need to communicate with one another.

Eoptolink manufactures high-speed optical modules and related components, while Zhongji Innolight is a major supplier of optical interconnect products used in AI data centres.

Their businesses can be broadly compared with optical communications companies such as Coherent and Lumentum.

Their large index weights give SCY meaningful exposure to the growth of AI data centre connectivity.

However, this also creates concentration risk if demand for optical equipment weakens or if expectations surrounding AI infrastructure spending change.

#4 - Batteries, renewable energy and energy storage

China’s next-generation technology ecosystem extends beyond AI chips, data centres and semiconductors. 

Contemporary Amperex Technology, or CATL, manufactures batteries used in electric vehicles and energy storage systems. 

Its products support areas such as transport electrification, renewable energy integration and electricity storage. 

CATL’s exposure to electric vehicles and energy storage can be broadly compared with parts of Tesla’s business, particularly Tesla Energy. However, CATL is primarily a battery supplier, while Tesla sells finished vehicles and integrated energy products. 

Sungrow Power manufactures solar inverters, which convert electricity generated by solar panels into a form that can be used by the electrical grid.

The company also supplies energy storage systems and related power equipment. 

#5 - Advanced electronic components

Chaozhou Three-Circle produces advanced ceramic and electronic components.

Its products are used across communications, consumer electronics, automotive and industrial applications.

Although component manufacturers may be less familiar than chip designers or battery producers, they form another part of the supply chain supporting electronic and industrial equipment.

How has the CSOP CSI STAR and ChiNext 50 Index ETF performed?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) has experienced significant swings in 2026.

According to CSOP, the ETF generated a 12.93% NAV-to-NAV return for the year to 31 July 2026.

Over the longer term, CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) returned 71.16% over the one year to 31 July 2026 and 61.04% since inception.

However, the ETF fell 27.07% in July alone, illustrating the volatility that can come with its concentrated exposure to technology and growth companies.

I would therefore view its historical performance as illustrating both the potential upside and downside of concentrated thematic exposure, rather than as an indication of future returns.

What are the risks of investing in the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) provides access to different parts of China’s technology ecosystem, but this also comes with meaningful concentration and volatility risks. 

#1 - High share price volatility

The recent correction in China’s technology market shows that strong gains can be followed by sharp pullbacks.

CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)'s performance in 2026 shows how quickly sentiment towards technology shares can change. 

After rising strongly in the first half of the year, CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) fell 27.07% in July alone. 

Companies linked to AI and other fast-growing technology themes can be particularly sensitive to changes in earnings expectations, valuations and investor sentiment.

#2 - Concentration in its largest holdings

Despite holding 50 companies, the index remains fairly concentrated. 

Its ten largest constituents accounted for about 63.6% of the index as of 31 July 2026. CATL alone made up 11.26%, while Zhongji Innolight and Eoptolink Technology together accounted for about 17.3%. 

This means CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)'s performance can still be meaningfully influenced by a relatively small number of companies and themes.

#3 - Technology cycle and valuation risk

Demand for semiconductors, optical components and manufacturing equipment can be cyclical.

Periods of strong demand may encourage companies to expand production capacity. If supply eventually grows faster than demand, selling prices and profit margins may come under pressure.

At the same time, strong share-price gains may already reflect high expectations for future growth. Even if earnings continue to rise, share prices may fall if results do not meet those expectations. 

#4 - Geopolitical and regulatory risk

Chinese technology companies may be affected by restrictions involving advanced semiconductor equipment, chip technologies, overseas customers and technology transfers.

Changes in government policies, industry regulations or international trade relations may also affect the operations and growth prospects of the ETF’s underlying companies.

#5 - Currency and ETF-related risks

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)’s base currency is renminbi, while its units are traded in Singapore dollars on the SGX.

Movements in the exchange rate between the renminbi and Singapore dollar may therefore affect investors’ returns.

Investors should also consider the ETF’s trading liquidity, tracking difference and the possibility that its market price may trade above or below its net asset value.

What would Beansprout do?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) provides a different type of China technology exposure from the internet platforms many investors may already be familiar with.

Its holdings are more concentrated in areas such as AI computing, semiconductor manufacturing, optical communications, batteries and advanced manufacturing. 

I would therefore view the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) as a more specialised way to gain exposure to China’s technology infrastructure and industrial development, rather than as a broad China market ETF.

Before investing, I would first look at what I already own. If I already have exposure through a broad China ETF, Hang Seng TECH ETF, global technology ETF or semiconductor stocks, I would consider how much additional exposure the CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) actually adds to my portfolio.

I would also be mindful of its concentration and volatility. A relatively small number of companies account for a large share of the index, which means performance can be more sensitive to changes in expectations around AI, semiconductors and other technology themes. 

For investors looking for broader exposure to China’s domestic equity market, a diversified China A-share ETF would spread exposure across a wider range of companies and sectors. The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) , by comparison, is more concentrated in China’s AI, semiconductor and advanced-manufacturing ecosystem. 

Ultimately, the key question for me is whether I specifically want more exposure to these themes, and whether I am comfortable with the concentration and volatility that come with it. 

Read our guide on how to gain broad exposure to China A-shares, or compare different SGX-listed ETFs for investing in China.

For exposure to China’s larger companies, find out how to invest through the FTSE China A50 Index and learn how the CSI A500 Index provides broader access to China blue-chip stocks.

Find out more about these ETFs on the SGX ETF screener page.

Explore SGX’s sector reports for more insights into market themes and opportunities across the local and global markets here.

If you are considering where to buy them, you may also want to check out our review of the best stock trading platforms in Singapore and the latest broker promotion.

Are there any ongoing broker promotions when I invest in CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY)?

The CSOP CSI STAR and ChiNext 50 Index ETF (SGX: SCY) is currently included in SGX ETF campaigns offered by CGS International and FSM Global.

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