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Asia ETF Roundup (Industry) – April 2017

Hong Kong regulator proposes guidelines for robo-advisors. Value Partners cut management fees for its China equity ETFs. RQFII ETFs recorded estimated net outflows of Rmb 0.5 billion

Jackie Choy 11/05/17

For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – April 2017”

ETF Industry News

HK Proposes Guidelines for Robo-Advisors
On 5 May 2017, Hong Kong Securities and Futures Commission issued the “Consultation Paper on the Proposed Guidelines on Online Distribution and Advisory Platforms”. The consultation paper laid out guidelines for online distribution and advisory platforms, which includes a chapter on “robo-advice” where it touches on (1) information for clients; (2) client profiling; (3) system design and development; (4) supervisions and testing of algorithms; (5) adequate resources; and (6) rebalancing.

The consultation seeks feedback from the public and industry by 4 August 2017.

Value Partners Cuts Management Fees on Two China ETFs to 10bps
On 24 April 2017, Value Partners announced it would cut management fees on its two China ETFs, namely the Value China ETF (03046) and the Value China A-Share ETF (03095/83095), to 10bps from 70bps, effective on 1 May 2017. As a result, the estimated on-going charges are reduced to 0.99% (from 1.54%) and 0.97% (from 1.52%), respectively, for the year ending 31 March 2018. Recall that in February this year, iShares cut the management fee (single fee structure) on one of its China A-Share ETFs to 0.38% from 0.99%. We view this positively as the fee reduction will ultimately benefit end-investors. This could potentially put pressure on other ETF providers to reduce fees.

Korea Introduces New Rules to Rename 83 ETFs in May
According to the Korea Exchange and Ignites, 83 ETFs will be renamed under new guidelines, effective on 2 May. Under the new rule, the name of equity ETFs will include the brand name, country, index, leveraged or inverse and the use of derivatives and/or currency hedging. For bond ETFs, similar rules apply with an inclusion of bond maturity after the name of the index. The names of ETFs are required to be in Korean, except for brand names and the indices. Any irrelevant words should not be included.

RQFII ETF Watch – Net Outflows in April Totaled Rmb 0.5 billion

  • RQFII ETFs recorded estimated net outflows of Rmb 0.5 billion in April 2017 (2% of beginning and ending AUM). This compares to net outflows of Rmb 2.0 billion in March. This puts YTD estimated net outflows from RQFII ETFs in Hong Kong at Rmb 2.2 billion.
  • The net outflows came mainly from the CSOP FTSE China A50 ETF (82822 & 02822), estimated at Rmb 0.5 billion.
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823), recorded virtually no net inflows in April. This compares to net outflows of Rmb 0.6 billion in March. As of 30 April 2017, we estimate the YTD total net outflows from the iShares FTSE A50 China Index ETF were Rmb 2.5 billion.

 

New Launches and Listings

One AM Lists an ETF in Singapore
On 6 April 2017, Thailand’s One Asset Management listed an ETF on the Singapore Exchange via the ASEAN collective investment scheme (CIS) framework, namely the One STOXX ASEAN Select Dividend Index Fund. The index fund was an open-ended fund established in Thailand in June 2015. This is a strategic-beta ETF tracking the STOXX ASEAN Select Dividend 30 Index, which consists of 30 high-dividend paying companies in the ASEAN equity markets. Currently, the index includes companies in the Phillipines, Vietnam, Thailand, Indonesia, Malaysia and Singapore. This ETF is classified as an Excluded Investment Product (EIP).

The listing of this ETF puts the number of the ETF listings in Singapore at 82.

Golden Eagle Lists a Money Market Fund in China
On 10 April 2017, Golden Eagle Fund listed a money market fund on the Shanghai Stock Exchange.

Cathay Lists Two Leveraged/Inverse ETFs in Taiwan
On 13 April 2017, Cathay Securities Investment Trust listed a pair of leveraged and inverse ETFs on the Taiwan Stock Exchange. The ETFs track the Bloomberg Barclays U.S. Treasury 20+ Year Daily Return Leverage 2X Index and the Bloomberg Barclays U.S. Treasury 20+ Year Daily Inverse 1x Index, respectively.

KB Lists 5 ETFs in Korea
On 14 April 2017, KB Asset Management listed 5 ETFs on the Korea Exchange. The ETFs track the FnGuide High Dividend Focus Index, and 1x, -1x, 2x and -2x daily performance of the S&P U.S. Treasury Bond Futures Excess Return Index, respectively.

HFT Lists a Bond ETF in China
On 21 April 2017, HFT Investment Management listed a bond ETF on the Shanghai Stock Exchange (SSE). The ETF tracks the SSE Cycle Industry Bond Index. The index consists of energy, raw materials, industrials, utility, IT and consumption sector bonds listed on the SSE.

The listing of the ETFs by Golden Eagle and HFT put the total number of ETF listings in China at 152.

Paradigm Lists a Soybean ETF in Taiwan
On 25 April 2017, Paradigm Asset Management listed an ETF on the Taiwan Stock Exchange that tracks the S&P GSCI Soybeans Excess Return Index.

The listings by Cathay and Paradigm put the total number of ETF listings on the Taiwan Stock Exchange at 77, of which 39 are leveraged/inverse ETFs.

Mirae Lists 2 ETFs in Korea
On 25 April 2017, Mirae Asset listed two ETFs on the Korea Exchange. The ETFs track the  KOSDAQ 150 Low Volatility Index and 2x daily performance of the F-KOSPI 200 Index, respectively.

The listing of ETFs by KB Asset Management and Mirae Asset puts the total number of ETF listings in Korea at 271.

List of ETFs Launched in April 2017

 

About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia