Roundhill Investments wants to mimic the success of its Magnificent Seven ETF (MAGS) in China.

The firm’s CEO Dave Mazza plans to launch the Lucky Eight ETF, which aims to be China’s answer to the success of Wall Street’s big tech stocks.

“There’s a lot of question marks about the Chinese economy and the potential for growth of the consumer in China,” Mazza told CNBC’s “ETF Edge” on Monday. “But at the end of the day, we believe that investors are looking for exposures that give them precision, just like we found with MAGS.”

Trading under the ticker “LCKY,” the Lucky Eight ETF will include equal-weighted exposure to Tencent Holdings, Alibaba, Meituan, BYD, Xiaomi, PDD Holdings, JD.com and Baidu at launch. According to Roundhill’s SEC filing on May 17, these names were chosen due to their “market dominance in technological innovation.”

“Particularly if they’re coming out of an economic slowdown, that could be an opportunity for investors to step into China and do so in just really the names that matter,” Mazza said. 

While existing exchange-traded funds such as the KraneShares CSI China Internet ETF offer broad exposure to Chinese tech, Mazza hopes to give investors the option to focus on just a few key names in the space.

“I firmly believe in broad based diversification for big parts of a portfolio,” Mazza said. “But if you just want those names, it’s hard to get with some traditional Chinese ETFs. And this is going to do that.”

Pending SEC approval, the Lucky Eight ETF is set to launch this summer.

Disclaimer

CNBC

FA Playbook The S&P 500 and Nasdaq stock indexes closed at record highs on Tuesday. There are risks ahead, though: Federal Reserve policy, a surprise recession and disappointing company earnings, one economist said. Long-term investors should avoid the impulse to sell if the stock market falls. Michael M. Santiago | Getty Images

The U.S. stock market has been swooning. But there are risks that threaten to put a lid on the euphoria.

The three “primary” risks are Federal Reserve policy, a surprise recession and lower-than-expected results on companies’ earnings, David Rosenberg, founder and president of economic consulting firm Rosenberg Research & Associates, said Wednesday at CNBC’s Financial Advisor Summit.

The S&P 500 and tech-heavy Nasdaq closed at record highs on Tuesday. The U.S. stock indexes are up about 11% each so far in 2024, as of about 3 p.m. ET on Wednesday.

Big threats to the stock market

Nvidia, an artificial intelligence chip maker, has played a big role in driving the stock market higher, market analysts said at the FA Summit.

The company, a “poster child for generative AI writ large,” was “singlehandedly responsible for the last leg of this bull market,” Rosenberg said. It’s up 90% in 2024 alone, as of about 3 p.m. ET on Wednesday.

Nvidia is “certainly a poster child” for stock market sentiment waxing more positive, Brandon Yarckin, COO of Universa Investments, said at the FA Summit.

More from FA Playbook:

Here’s a look at other stories impacting the financial advisor business.

Nvidia reports quarterly earnings results after the market close on Wednesday.

Disappointing results could send the stock market lower, Rosenberg said. It would be similar to what happened around the dot-com craze in 2000, when missed earnings results by Cisco ended the tech mania, he added.

Also, Fed policymakers have raised interest rates to their highest level in two decades to rein in high inflation. It’s unclear when the Fed may start to lower borrowing costs; many market forecasters expect them to do so at least once by the end of the year.

High interest rates have pushed up earnings

CNBC

A dispute between a fintech startup and its banking partners has ensnared potentially millions of Americans, leaving them without access to their money for nearly two weeks, according to recent court documents. Synapse serves as a middle-man between customer-facing fintech brands and FDIC-backed banks, but it’s had disagreements with several of its partners about how much in customer balances it owed. The situation left users of several fintech services stranded with no access to their funds, according to testimonials filed this week in a California bankruptcy court. Sarinyapinngam | Istock | Getty Images

A dispute between a fintech startup and its banking partners has ensnared potentially millions of Americans, leaving them without access to their money for nearly two weeks, according to recent court documents.

Since last year, Synapse — an Andreessen Horowitz-backed startup that serves as a middle-man between customer-facing fintech brands and FDIC-backed banks — has had disagreements with several of its partners about how much in customer balances it owed.

The situation deteriorated in April after Synapse declared bankruptcy following the exodus of several key partners. On May 11, Synapse cut off access to a technology system that enabled lenders, including Evolve Bank & Trust, to process transactions and account information, according to the filings.

That has left users of several fintech services stranded with no access to their funds, according to testimonials filed this week in a California bankruptcy court.

One customer, a Maryland teacher named Chris Buckler, said in a May 21 filing that his funds at crypto app Juno were locked because of the Synapse bankruptcy.

“I am increasingly desperate and don’t know where to turn,” Bucker wrote. “I have nearly $38,000 tied up as a result of the halting of transaction processing. This money took years to save up.”

10 million ‘end users’

Until recently, Synapse, which calls itself the biggest “banking as a service” provider, helped a wide swath of the U.S. fintech universe provide services like checking accounts and debit cards. Former partners included Mercury, Dave and Juno, well-known fintech firms that catered to segments including startups, gig workers and crypto users.

Synapse had contracts with 20 banks and 100 fintechs, resulting in about 10 million end users, according to an April filing from founder and CEO Sankaet Pathak.

Pathak didn’t immediately return an email

CNBC

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary stated. The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024. U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., May 1, 2024.  Kevin Lamarque | Reuters

Federal Reserve officials grew more concerned at their most recent meeting about inflation, with members indicating that they lacked the confidence to move forward on interest rate reductions.

Minutes from the April 30-May 1 policy meeting of the Federal Open Market Committee released Wednesday indicated apprehension from policymakers about when it would be time to ease.

The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024. The Fed targets a 2% inflation rate, and all of the indicators showed price increases running well ahead of that mark.

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary said. “The recent monthly data had showed significant increases in components of both goods and services price inflation.”

The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” Several Fed officials, including Chair Jerome Powell and Governor Christopher Waller, have said they doubt the next move would be a hike.

The FOMC voted unanimously at the meeting to hold its benchmark short-term borrowing rate in a range of 5.25%-5.5%, a 23-year high where it has been since July 2023.

“Participants assessed that maintaining the current target range for the federal funds rate at this meeting was supported by intermeeting data indicating continued solid economic growth,” the minutes said.

Since then, there have been some incremental signs of progress on inflation, as the consumer price index for April showed inflation running

CNBC