Long time no see! Currency ETFs can also hit the daily limit

It's truly a sight to behold! Currency ETFs can hit the daily limit, and it's not even a case of erroneous trading!

On January 24th, multiple currency ETFs hit the daily limit during trading, with China Life Currency ETF (511970) closing at the limit, and another 4 currency ETFs rising over 7%. There have been instances of hitting the limit before, but they were mainly due to erroneous trading with very low transaction volumes. These products, however, have transaction amounts in the millions or even tens of millions, and there were continuous high-price transactions during the day, which do not seem like erroneous trades.

Currency ETFs are money market funds that can be traded on the exchange, and the net asset value of the vast majority of these products is fixed at 100 yuan. One lot consists of 100 shares, with a minimum purchase of 1 lot, which is about 10,000 yuan.

These products are quite popular during periods of high returns in money market funds, but as the returns on money market funds have gradually decreased, coupled with the Matthew effect of ETFs, there are currently relatively few actively traded products in the market. HuaBao TianYi (511990) and YinHua RiLi (511880) can be considered the dual champions, at the hundred billion level; JianXin TianYi (511660) stands alone at the ten billion level; CaiFuBao E (511850), BaoZhengJin (159001), and on-exchange currency (511700) are at the billion level. The varieties that everyday investors mainly participate in are these, and the performance of these products today is quite normal.

As cash management products, how can there be good liquidity? It wouldn't do to be unable to sell when you want to, so some products have fallen to the ten thousand level. Taking the Huatai TianTianJin ETF (511670), which closed with a rise of 7.13%, as an example, it traded 4.79 million today, while this fund averaged a daily transaction of 20,000 yuan in the first four days of this week.

Beyond Rationality

Everyone knows that the returns on money market funds are not high, and the returns on currency ETFs may even be below the average level of similar products. The limit price is equivalent to six or seven years of returns at the current level.

Clearly, this price is completely irrational.

However, there are still many irrational things happening in the market recently, such as some QDII-ETFs having premiums as high as 50%, and others at 20% or 30%. Even if overseas markets perform well, it's hard to achieve such levels of increase in a year. Yet the trading prices in the market are significantly higher than the net asset values, and these premium levels can persist for many days.

As a rational person, I am trying to understand why the world is so crazy right now, yes, I am trying.

Traditional Tactics

It's not difficult to outline the tactics of speculation:

The targets selected by speculative funds are mainly those with limited shares, restricted new shares (either in quantity or time), poor liquidity, and T+0 funds, mostly ETFs, with a few LOFs as well Through on-site subscription or purchase, quietly accumulate shares and lie in wait.

Once the shares are sufficient, use multiple accounts to trade with each other, creating a wash trade to drive up the price.

If follow-up funds come in, you can take the opportunity to sell at a high price and realize profits.

If follow-up funds do not come in and you cannot sell, then redeem at net value.

The previously mentioned QDII-ETF attracted too much follow-up funding, making it a bit difficult to manage, and indeed there were not many new shares; this time, the currency ETF is unlikely to have such luck, because when subscribing to the currency ETF, the volume is ample, and the new shares will be in place on T+2 day, which can quickly bring down the premium. It’s just uncertain how much capital will pay attention to this as the long holiday approaches.

This article is sourced from 基民柠檬， original title: "Never Seen Before! Currency ETF Can Even Limit Up"

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