Cathay SITE Warns Investors of Excessive Premium on 00916 ETF, Urges Risk Assessment

(CNA, Reporter Tseng Jen-kai, Taipei, 9th) The Cathay Global Brand 50 (00916) ETF, which is set to go ex-dividend on June 16 with an estimated dividend of NT$3.8 per share and an annualized yield exceeding 13%, has attracted a flood of capital. Cathay SITE issued a reminder today, stating that the premium on 00916 is excessive and called on investors to carefully evaluate the risks.

According to the latest data on Cathay SITE's official website as of 3:30 PM on the 9th, 00916's closing price today was NT$29, compared to an estimated net asset value (NAV) of NT$27.7, resulting in a premium of about 4.69%.

Cathay SITE announced today that due to recent active stock market trading, 00916 has experienced a premium, and the fund is conducting share sales to control it. Cathay SITE reminds investors that the initially announced estimated dividend for 00916 is for reference only, and the actual dividend amount from the second announcement should be used as the standard, urging careful evaluation of related risks during trading.

Cathay SITE explained that when investors excessively buy into ETFs during a significant market pullback, it can easily cause the ETF's stock price to deviate from and exceed its NAV, creating a premium. This is because the ETF market's trading process primarily involves market makers first purchasing shares from the asset management company in the primary market, and then selling those shares to investors in the secondary market to help stabilize the stock price close to the NAV.

Cathay SITE further pointed out that if an ETF experiences a significant premium, it indicates that investors have been chasing the price excessively in a short period, causing a short-term supply-demand imbalance in the market. This leads to a discrepancy between the stock price and the NAV, at which point it is not advisable to further invest in that ETF.

Cathay SITE reminds investors to pay attention to the real-time premium/discount information disclosed on the asset manager's official website before buying an ETF, to carefully assess the difference between the trading price and the fund's NAV, and to avoid a gap between short-term investment performance and expectations due to excessive price chasing. (Editor: Yang Kai-hsiang) 1150609