Oil and Gas Theme Funds Accelerate "Gas Pedal" Risk Warning Urgently "Brake" to Cool Down

Due to the escalation of Middle East tensions last weekend, international oil prices surged significantly, and the oil and gas sector in the A-share market also experienced a collective rally over the past two days.

On March 2, the CSI Oil & Gas Industry Index, CSI Oil & Gas Resources Index, and Guozheng Petroleum & Natural Gas Index opened high and closed higher, with gains of 7.63%, 9.18%, and 8.30% respectively. Several on-market oil and gas themed funds, including the Wanguo S&P Oil & Gas Exploration and Production Select Industry ETF (QDII) and the Harvest S&P Oil & Gas Exploration and Production Select Industry ETF (QDII), hit the daily limit.

On March 3, these three major oil and gas indices continued to open high and rise, closing with increases of 6.77%, 8.33%, and 8.50%. Multiple on-market oil and gas themed funds again reached the daily limit. Amid this situation, many funds issued risk warnings about premium risks and temporary suspension notices to cool the market.

On March 4, the three major indices opened high but declined significantly by the close, with drops of 2.81%, 2.45%, and 2.60%. Related on-market funds also declined collectively.

According to iFinD data from Tonghuashun, Brent crude oil (BRN0Y) experienced substantial gains on three trading days—February 27, March 2, and March 3—rising by 3.35%, 7.14%, and 5.43% respectively. On March 3, the intraday high reached $85.12. On March 4, Brent crude (BRN0Y) opened at $82.00, fluctuated upward during the day, and by 3 p.m. Beijing time, increased by 3.30% to $84.09.

As prices rose, oil and gas themed funds also saw significant returns. As of March 3, across the market, there were 50 oil and gas themed funds, including 25 passive index funds, 18 QDII equity funds, and 7 QDII commodity funds. The top performers this year were the Huatai-PineBridge CSI Oil & Gas Resources ETF, Bosera CSI Oil & Gas Resources ETF, and Yinhua CSI Oil & Gas Resources ETF, with net asset values increasing by 56.86%, 55.97%, and 55.52%, respectively.

Compared to the net asset value increases, some on-market oil and gas themed funds frequently traded at premiums. From March 1 to 3 p.m. on March 4, a total of 10 funds issued 27 premium risk warning notices. The funds with the most warnings were the Southern Oil LOF and the Wanguo S&P Oil & Gas Exploration and Production Select Industry ETF (QDII), each issuing five notices and experiencing multiple suspensions.

At 9 a.m. on March 4, Wanguo Fund’s Wanguo S&P Oil & Gas Exploration and Production Select Industry ETF (QDII) announced that recently, the secondary market trading price significantly exceeded the fund’s net asset value (IOPV), showing a large premium. Investors are warned to be cautious of the premium risk in secondary market trading. Blind investment could lead to substantial losses. To protect investors’ interests, the ETF will be suspended from market open on March 4 until 10:30 a.m. If the premium does not effectively decrease, the fund manager may apply for intraday temporary suspension or extended suspension measures with the Shanghai Stock Exchange to alert the market.

Has the premium for the S&P Oil & Gas ETF on the market “cooled down”? On March 2, the latest unit net value of Wanguo S&P Oil & Gas ETF was 1.1488 yuan, while the closing price on the same day was 1.261 yuan, with a premium of 9.77%. On March 4, the opening price was 1.248 yuan, down 10.02% from the previous close, then quickly rose to a high of 1.520 yuan, up 9.59%, before sharply falling at the end of the session, closing at 1.381 yuan, down 0.43%.

Regarding future oil price trends, He Ning, an analyst at Kaiyuan Securities, stated that due to the escalation of Middle East tensions, international oil prices are likely to rise further.

Several foreign institutions’ analysts, including Citigroup, Goldman Sachs, and JPMorgan Chase, have also raised their oil price forecasts. Citigroup has raised its short-term Brent crude oil forecast to $85 per barrel, noting that regional energy infrastructure risks are increasing under the current situation, with Brent prices expected to trade between $80 and $90 per barrel for at least the next week.

(Edited by: Wen Jing)