SHANGHAI (Reuters) – China’s securities regulator has given the green light to the country’s first mutual fund targeting top Chinese and South Korean chipmakers, Huatai-PineBridge Fund Management Co said, amid an escalating Sino-U.S. technology war.

The approval by the China Securities Regulatory Commission comes amid heightened geopolitical tensions between the world’s two largest economies. On Friday, the Biden administration unveiled a wide-ranging set of export controls aimed at hampering China’s chip industry. Huatai-PineBridge submitted an application for regulatory approval on August 9.

The exchange-traded fund (ETF) will invest in top Korean semiconductor firms including Samsung Electronics Co and SK Hynix Inc, as well as Chinese chip giants such as Semiconductor Manufacturing International Corp and Montage Technology Co.

“The Chinese and Korean semiconductor industries are expected to be closely integrated, creating synergies,” Huatai-PineBridge said in a prepared marketing material for the ETF, which has yet to be launched.

The fund will also benefit from China’s acceleration toward technological self-sufficiency amid U.S. sanctions, according to marketing material that cited the U.S. blacklisting of China’s Huawei Technologies Co Ltd and the recently passed CHIPS and Science Act.

In 2021, South Korea was the second-largest exporter of equipment, including tools for making chips, and Chinese exports to South Korea are also growing, the fund manager said.

South Korea said on Saturday that there would be no significant disruption to equipment supplies for Samsung and SK Hynix’s existing chip manufacturing in China due to the US move.

New US export controls are an abuse of trade measures, Chinese Foreign Ministry spokesman Mao Ning said on Saturday.

The newly approved ETF will track the CSI KRX China-Karea Semiconductor Index.

The index was launched as part of a wider cooperation agreement signed last year between the Shanghai Stock Exchange and the Korea Exchange (KRX) to promote cross-border investment between the two markets.

(Reporting by Samuel Shen and Brenda Guo; Editing by Ana Nicolacci da Costa)

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