The premium on the CPIC SSE STAR Chip Design Thematic ETF jumped to a record 6.2% on Friday, compared to an average of just 0.1% since the fund’s inception.

The spike shows how investors have been bidding up the fund, taking prices above the value of its underlying assets.

Premiums on the Penghua SSE STAR Chip ETF and the China Universal SSE Science and Technology Innovation Board 50 ETF also rose to above their long-term averages.

Semiconductor stocks have been on a tear in recent sessions, bolstered by DeepSeek’s updated artificial intelligence model and expectations that Beijing’s self-sufficiency drive will aid local players.

The sector’s surge has added fuel to a blistering rally in Chinese equities, even as concerns grow over a disconnect between market optimism and the economy’s weak fundamentals.

Such price distortions in ETFs suggest sentiment may be getting overheated, at least in some sectors.

The Star 50 Index — which offers exposure to hardware tech stocks — gained as much as 5.8% today, taking its advance this month to about 20%.

The benchmark CSI 300 Index rose more than 1%, adding to last week’s 4.2% advance.

“This shows a mismatch between the value and the price of some Star 50 stocks, and it’s unmistakable that many are overbought, so over the long term we will see a reversion to value,” Huang Huiming, fund manager at Nanjing Jing Heng Investment Management Co.

“However, sentiment is the dominant factor, and it’s possible that these heated levels could remain for days,” Huiming said.

The premium dislocation is partly due to heavyweights such as Cambricon Technologies and Hygon Information Technology Co jumping by their 20% limit on Friday – which restricted ETFs’ additional purchase of the stocks despite steady inflows into the funds.