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Judy Xue

A leading Chinese brokerage house has ended market making for the mainland’s only South Korea-focused exchange-traded fund (ETF), as Beijing steps up efforts to stabilise its capital markets and protect retail investors amid volatility in its East Asian neighbour’s stock market.
Shenzhen-headquartered China Merchants Securities withdrew as a liquidity provider for the Huatai-PineBridge China-Korea Semiconductor ETF barely a month after assuming the role on June 17, according to Shanghai Stock Exchange filings.
The retreat came amid heightened turbulence in South Korea, where time zone differences and foreign exchange risk in cross-border arbitrage left market makers exposed to sharp price swings and liquidity constraints, said Yiming Li, senior analyst for manager research at Morningstar.
“The decision was purely commercial and did not reflect our view on market directions,” China Merchants told financial media outlet JWView on Monday, the same day it quit the ETF.
The brokerage also ended market-making services – the provision of buy and sell quotes to provide liquidity – for five other Qualified Domestic Institutional Investor (QDII) products linked to Japan’s Nikkei 225 and the United States’ Nasdaq 100 indexes. QDII funds allow approved institutions to invest overseas within regulator-set limits.
In Seoul, the benchmark Korea Composite Stock Price Index surged 116 per cent from about 4,224 points early this year to a record 9,385.59 on June 19, before plunging over 28 per cent to 6,516.27 on Monday. The sell-off triggered eight marketwide circuit breakers and 37 “Sidecar” trading halts – automatic cooling-off periods that temporarily pause algorithmic trading during volatile sessions.
On Wednesday, the ETF surged as high as 7.9 per cent before closing up 1.06 per cent, with turnover staying above 23 billion yuan (US$3.18 billion), exchange data showed.
To curb speculation, the Shanghai Stock Exchange has forced the fund to suspend morning trading on at least 55 occasions this year, while manager Huatai-PineBridge Fund Management has issued over 100 risk warnings.
Morningstar’s Li noted that fewer active market makers could increase volatility in the ETF’s premium and discount-to-net asset value, warning that buying at elevated premiums would erode long-term investment returns for retail investors.
On Monday, the China Securities Regulatory Commission (CSRC) convened a meeting with eight investor representatives following recent market declines, amid coordinated state buying seen as supporting China’s A-share market.
“The CSRC will adhere to coordinated measures to prevent risks on the capital market, strengthen regulatory oversight and promote high-quality development to strive for the stable operation of the market,” CSRC chairman Wu Qing said in the meeting.


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The Shenzhen-based brokerage’s retreat from Huatai-PineBridge semiconductor fund comes just weeks after stepping in as market maker


The Shenzhen-based brokerage’s retreat from Huatai-PineBridge semiconductor fund comes just weeks after stepping in as market maker.


China Merchants Securities drops South Korea ETF as Seoul stock volatility spills over

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The Shenzhen-based brokerage’s retreat from Huatai-PineBridge semiconductor fund comes just weeks after stepping in as market maker

The Shenzhen-based brokerage’s retreat from Huatai-PineBridge semiconductor fund comes just weeks after stepping in as market maker