How China is fuelling demand for this leading ASX ETF

A host of companies work around the clock to keep your digital data secure.

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Hackers have been active on the internet since the earliest days.

That's led to a range of new business opportunities for companies working to safeguard our digital information.

These days, the business of securing internet data from malicious attacks is worth tens of billions of dollars annually. And growing.

This growing need saw the launch of Betashares Global Cybersecurity ETF (ASX: HACK) in September 2016.

HACK, an exchange traded fund (ETF), offers ASX investors exposure to 39 leading global cyber security shares. The fund's top holdings include Zscaler, Crowdstrike Holdings, Accenture, and Cisco Systems.

There currently aren't any ASX listed cyber security firms among the ASX ETF's holdings, as the market caps of the Aussie shares are still too small.

A hooded person sits at a computer in front of a large map of the world, implying the person is involved in cyber hacking.

Image source: Getty Images

How China is fuelling this ASX ETF

While many hackers work independently, there are also massive state-backed cyber teams. Some work for good while others work to disrupt internet systems in nations on their naughty lists.

China, while officially denying these allegations, has been named as one of the top state-backed hacking sources. And Australia has been one of the biggest victims.

The reason is said to be Australia's leading role in demanding an independent international probe into how COVID-19 came into being. Prime Minister Scott Morrison first made that demand in April 2020.

Not much later, Bloomberg reports, "Chinese bots swarmed on to Australian government networks."

The bots ran hundreds of thousands of scans, apparently looking for vulnerabilities that could later be exploited. It was a massive and noisy attack with little effort made to hide the bots' presence, said Robert Potter, chief executive officer of Internet 2.0, an Australian cybersecurity firm that works extensively with the federal government.

You likely remember the wave of cyber attacks that followed. Among others, those targeted were the Australian government and healthcare agencies, the department of defence, alongside multiple businesses and universities.

As who's to blame? While the Aussie government has been careful not to aggravate matters by directly pointing fingers, according to Bloomberg:

While Beijing denied any involvement, cybersecurity experts traced much of the activity to systems used by China-based advanced persistent threat groups or APTs, a term often used to describe state-sponsored hackers.

How has HACK performed?

The ASX ETF has had a strong run over the past 12 months, gaining 40%. By comparison the All Ordinaries Index (ASX: XAO) is up 25% over that same time.

HACK has continued to outperform the index this year and is up 6% over the past month.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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