ETF Spotlight: Greater China – One region, multiple growth drivers

• Taiwan and China are benefiting from the same AI infrastructure cycle through different growth drivers, reinforcing the long-term investment case for Greater China.

• Taiwan's semiconductor ecosystem and China's technology platforms provide complementary sources of earnings growth, diversification, and exposure across the AI value chain.

• The Global X FTSE Greater China ETF (HKEX: 3470) tracks 1,443 companies across Mainland China, Hong Kong, and Taiwan, providing broad regional exposure through a single investment vehicle.

• Nearly half of the ETF's portfolio is allocated to China, while more than one-third is invested in Taiwan, with technology-related sectors accounting for around 56% of holdings.

• 3470 is currently the only ETF on our platform providing comprehensive exposure across Mainland China, Hong Kong, and Taiwan, offering investors a cost-efficient, single investment vehicle to capture opportunities across the Greater China region.

TSMC delivered a record second quarter last week, with revenue exceeding both the upper end of its own guidance and market expectations. The results reinforced the continued strength in AI-related demand, as advanced chip production remained capacity constrained.

At the same time, China's exports surged 27.0% year-on-year in June, the fastest pace since October 2021. First-half exports rose 16.9% year-on-year, with China's customs authority explicitly identifying semiconductors and computing equipment as the key drivers of growth.

While Taiwan and China are often viewed as separate investment markets, both are benefiting from the same structural tailwind: the global AI infrastructure build-out. Although the investment narratives differ, the latest earnings and trade data show that AI demand is translating into stronger corporate earnings, manufacturing activity, and exports, reinforcing the long-term investment case for the broader Greater China region.

Why invest in Greater China equities?

In the current AI cycle, Taiwan and China represent two complementary sides of the same investment opportunity. Taiwan sits at the heart of the global AI hardware supply chain, producing the advanced chips, packaging, and server infrastructure that power AI computing. China, meanwhile, is building its own AI ecosystem through continued investment in large language models, cloud computing, and digital platforms. Together, they offer investors exposure to both the hardware and software layers of AI.

Taiwan's competitive advantage extends well beyond TSMC. ASE Technology, the world's largest outsourced semiconductor assembly and testing provider, expects its advanced packaging and testing revenue to double this year, prompting an increase in capital expenditure from USD 7.0 billion to USD 8.5 billion to expand capacity. MediaTek is also evolving beyond its traditional smartphone business into a custom AI chip design partner for hyperscale cloud providers. Its collaboration with Google alone is expected to contribute around USD 2 billion in revenue in the fourth quarter of 2026, while management has raised its estimate of the addressable custom cloud AI chip market to USD 70–80 billion by 2027. From wafer fabrication and advanced packaging to chip design and AI server components, Taiwan's semiconductor ecosystem spans nearly every critical layer of AI infrastructure, creating a competitive advantage that few markets can replicate.

China's investment story is evolving along a different path. While much of investors' attention in 2026 has centred on AI hardware beneficiaries in Taiwan, Japan and Korea, Chinese technology platforms are beginning to regain momentum as AI investments translate into improving earnings fundamentals. Alibaba Cloud grew revenue by 36% year-on-year in its latest quarter, with AI-related products accounting for around 30% of external cloud revenue, up from a single-digit contribution just two years ago. Several leading Chinese technology companies also outperformed since the start of July, helping lift the Hang Seng TECH Index by about 6.3%, reflecting improving investor confidence in China's AI platform ecosystem.

Chinese technology companies also provide diversification that is increasingly valuable within Asia. Unlike Taiwan and Korea, where equity markets are heavily concentrated in semiconductor manufacturers, China's largest technology companies derive earnings from internet platforms, cloud services, digital advertising, and AI applications. These businesses are exposed to a different set of growth drivers, creating a complementary source of returns within a broader Greater China allocation. Valuations further strengthen the investment case. Despite the recent rebound, the Hang Seng TECH Index continues to trade at levels that suggest much of the earlier pessimism has already been priced in, leaving scope for further recovery as earnings continue to improve.

Taken together, Taiwan's hardware leadership and China's AI-driven platform ecosystem offer investors complementary sources of growth within the same structural AI theme. For investors seeking broad exposure to these opportunities across the Greater China region, the Global X FTSE Greater China ETF provides a cost-efficient, convenient and diversified way.

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Introducing the Global X FTSE Greater China ETF (HKEX: 3470)

The Global X FTSE Greater China ETF tracks the FTSE MPF Greater China Index, providing investors with broad exposure to 1,443 companies across Mainland China, Hong Kong, and Taiwan through a single investment vehicle. Since its listing, it has generated a cumulative NAV return of 43.21%, compared with 44.67% for the underlying index, demonstrating efficient index replication.

Table 1: Global X FTSE Greater China ETF characteristics

The ETF's geographic allocation reflects the breadth of the Greater China investment universe. Nearly half of the portfolio is invested in China, while more than one-third is allocated to Taiwan, with the remainder invested in Hong Kong and other markets.

Figure 1: China and Taiwan account for the majority of the ETF's geographic exposure

Sector-wise, the portfolio is tilted towards technology-related industries. Information technology is the largest sector allocation, while information technology, consumer discretionary, and communication services together account for around 56% of the portfolio, encompassing many of the region's leading technology companies.

Figure 2: Information technology is the largest sector exposure within the Global X FTSE Greater China ETF

Consistent with this sector allocation, the ETF's top holdings are anchored by leading technology companies, while the inclusion of major banks and insurance companies provides exposure to the broader economy.

Table 2: Top 10 holdings of the Global X FTSE Greater China ETF

Why 3470 is the only true Greater China ETF

While some ETFs are marketed under the "Greater China" label, many are predominantly invested in Mainland China and Hong Kong equities, with little or no exposure to Taiwan. As a result, they may not provide investors with comprehensive exposure to the broader Greater China region.

The CoreValues Alpha Greater China Growth ETF (NYSE: CGRO) illustrates this distinction. Despite its name, the fund invests exclusively in Mainland China A-shares, Hong Kong-listed companies, and US-listed Chinese ADRs, with holdings including Tencent, Alibaba, Xiaomi, Meituan, and PDD Holdings. It does not hold any Taiwan-listed companies, meaning investors are primarily gaining exposure to China's equity market rather than the broader Greater China region.

Table 3: Global X FTSE Greater China ETF versus CoreValues Alpha Greater China Growth ETF

We remain constructive on the Greater China region, with Taiwan rated 4 Stars “Very Attractive” and both China and Hong Kong rated 3.5 Stars “Attractive” in our recent market outlook. Together, these markets provide complementary exposure to both the hardware and software segments of the AI value chain.

For investors seeking to express this investment theme, the Global X FTSE Greater China ETF offers a straightforward and diversified solution. As the only ETF on our platform providing comprehensive exposure to Mainland China, Hong Kong, and Taiwan, it serves as a single investment vehicle for capturing opportunities across the broader Greater China region.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.