Cross-border ETFs attracted a total net inflow of 21.007 billion yuan last week, with internet, innovative drugs, and securities sectors remaining the primary "money magnets."

Following the consolidation in the first week of September, A-share markets rebounded strongly last week (September 8-12). The ChiNext Index broke through the 3,000-point threshold, rising 2.1% for the week, while the Shanghai Composite and Shenzhen Component indices gained 1.52% and 2.64% respectively.

In the ETF market, chip and semiconductor-themed ETFs took center stage last week. The China Korea Semiconductor ETF managed by Huatai-PineBridge Fund topped the ETF gainers list with a 10.41% return, marking it as the only ETF in the market currently tracking the CSI Korea Exchange China Korea Semiconductor Index. According to the index methodology, this index comprises the CSI Semiconductor 15 Index and KRX Semiconductor 15 Index with equal weighting, reflecting the overall performance of leading semiconductor companies listed in mainland China and South Korea.

On September 12 local time, the U.S. Bureau of Industry and Security (BIS) announced the addition of 23 Chinese entities, including Fudan Microelectronics, to the Entity List. On September 13, China's Ministry of Commerce announced the initiation of an anti-dumping investigation into analog chips imported from the United States, with relevant U.S. manufacturers including Texas Instruments (TI), Analog Devices Inc. (ADI), Broadcom, and ON Semiconductor.

CITIC Securities believes that while U.S. semiconductor restrictions on China will continue to intensify, their effectiveness is gradually diminishing and may actually accelerate domestic substitution in China's AI and semiconductor industries. Future focus areas include foundry services, AI chip design, domestic equipment and components, and advanced packaging.

A Minsheng Securities research report indicates that preliminary evidence from the anti-monopoly investigation shows that from 2022 to 2024, imports of general interface and gate driver chips from the U.S. increased 37% cumulatively while import prices fell 52%, severely damaging domestic companies' gross margins. This anti-dumping investigation represents a policy escalation specifically targeting analog chips since the State Council announced additional tariffs on all U.S. imports on April 4, serving as an important countermeasure. The determination for domestic substitution of analog chips is now very clear, strongly supporting the accelerating trend of localization in the analog IC industry.

The report cites TI disclosure data showing that TI's 2024 revenue from Chinese end customers was approximately $3.012 billion, accounting for 19% of total revenue. Similarly, ADI, another major U.S. analog chip giant, generated approximately $2.129 billion from the Chinese market in 2024, representing about 23% of revenue when considering distributors and OEMs. The combined revenue of TI and ADI from China exceeded $5 billion in 2024. Considering other U.S. semiconductor manufacturers like ON Semiconductor and Microchip, U.S. companies still hold significant market share in China's analog chip market, indicating substantial room for domestic substitution.

**Fund Flows**

Cross-border ETFs played the role of major "fund magnets" last week, with net inflows of 21.007 billion yuan leading by a wide margin. From individual product scale changes, funds continued to favor hot sectors including internet, innovative drugs, and securities.

Last week, media reports suggested the Trump administration was discussing strict restrictions on drugs sourced from China, causing significant declines in the innovative drug sector. However, iFinD data shows that Hong Kong biotech ETFs received 35.55 billion yuan in net inflows last week, demonstrating that funds are not deterred by Trump administration threats and remain optimistic about the sector's long-term prospects.

Huafu Securities research points out that innovative drug exports are an important strategy for Chinese pharmaceutical companies to secure R&D funding and enhance competitiveness and brand value. In the first half of 2025, there were 72 license-out transactions, already exceeding half of 2024's total. In terms of transaction value, the total amount exceeded 2024's full-year total by 16%, with 15 transactions exceeding $1 billion each, accounting for 47% of disclosed transactions.

Huafu Securities believes that the innovative drug sector may continue to benefit from overseas business development and data readouts, along with accelerating growth rates as third-quarter performance bases gradually decline and industry regulatory policy disruptions ease. The pharmaceutical industry is expected to continue delivering outperformance.

Commodity ETFs were another category receiving net fund inflows, totaling 2.229 billion yuan. These funds were primarily attracted by gold prices, which fluctuated higher last week, as investors sought to capitalize on the "gold rush" through gold-themed ETFs.

**Scale Changes**

Among ETFs with significant scale growth last week, sector ETFs and broad-based ETFs each occupied "half the market." Among broad-based ETFs, Southern Fund's CSI 500 ETF saw the fastest scale growth, increasing by 5.689 billion yuan last week. For sector ETFs, besides Hong Kong internet and Hong Kong biotech products, solid-state battery themed ETFs continued to expand in scale despite cooling gains compared to the first week of September. ChinaAMC's Battery 50 ETF grew by over 2.8 billion yuan last week.

Money market funds, which had attracted fund inflows during early September's volatility, fell into "hemorrhaging" territory last week. Yinhua Daily ETF saw its scale shrink by over 8 billion yuan last week, while China Universal Added Income ETF also decreased by 619 million yuan.