China’s Nasdaq-Focused ETF Frenzy Sends Premiums to 24% as Investors Rush for US Stocks

Chinese investors are paying steep premiums for ETFs tracking US equities, as pent-up demand for overseas assets collides with limited investment quotas.

China Opens the QDII Tap

China’s foreign exchange regulator recently raised the outstanding Qualified Domestic Institutional Investor (QDII) quota by $6.8 billion to a record $183 billion, expanding the amount Chinese institutions can invest overseas, according to Reuters.

But the move has unleashed demand rather than eased it. U.S.-focused funds have moved quickly to restrict subscriptions again after briefly raising their limits.

The U.S. is already the largest destination for QDII funds, accounting for nearly half of the roughly 1 trillion yuan ($150 billion) QDII business, according to Shanghai Securities, cited by Reuters.

Nasdaq ETFs Become the Pressure Point

The frenzy is most visible in ETF pricing.

A Shenzhen-listed ETF tracking the Nasdaq-100 Technology Sector Index traded at a premium of about 24% to its net asset value on Wednesday.

That means investors were effectively paying almost 25% more than the underlying value of the assets represented by the fund to obtain exposure through the China-listed vehicle.

Another product, the China Merchants Nasdaq-100 ETF, recently traded at a premium of nearly 10%.

The premium is not a bet that the Nasdaq-100 is suddenly worth 25% more. It reflects the scarcity of authorized channels for mainland investors seeking overseas exposure.

Funds Keep Flipping Subscription Limits

The demand has become so intense that fund managers are repeatedly changing subscription limits.

Wanjia Asset Management’s Nasdaq-100 QDII fund raised its daily individual subscription limit from just 10 yuan to 5,000 yuan on Sept. 9.

One day later, it slashed the limit back to 100 yuan.

China Universal Asset Management similarly eased restrictions on its Nasdaq-100 product before tightening them again two days later. TruValue Asset Management made a similar U-turn on a QDII fund investing in global semiconductor stocks.

Ivan Shi, head of research at Z-Ben Advisors, told Reuters that the restrictions indicated "explosive inflows" and reflected continued appetite for U.S. technology stocks.

It’s Not Just Nasdaq

The demand is spreading across other global-asset products.

QDII funds focused on global semiconductor stocks are also seeing heavy demand, giving Chinese investors exposure to companies such as Nvidia Corp and other US chipmakers.

The appetite also extends beyond equities. Pictet’s Strategic Income Fund, available to mainland investors through China’s Mutual Recognition of Funds scheme, has grown to $5.1 billion in 2026, with about 60% of its assets coming from mainland Chinese retail investors. Its portfolio includes US Treasuries, gold, Nvidia, Amazon and Alphabet, Reuters reported.

Why Chinese Investors Are Looking Abroad

The backdrop is a sharp yield and performance gap.

China’s 10-year government bond yield is more than three percentage points below U.S. Treasury yields, while Chinese equities have broadly lagged the double-digit gains delivered by U.S. stocks this year.

China’s portfolio investment deficit reached a record $426 billion in 2025, followed by $146 billion of net outflows in the first quarter of 2026.

The result is an unusual ETF phenomenon: Chinese investors are not just chasing U.S. stocks — they are paying a premium for access to them.

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