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Asia ETF Roundup (Industry) – September 2017

FTSE Russell keeps China A-Shares on Watch List for possible inclusion; FTSE Russell enhances its Industry Classification Benchmark and adds “Real Estate” industry effective on 1 January 2019; RQFII ETFs net outflows estimated at Rmb 1.3 billion. 

Jackie Choy 12/10/17

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

ETF Industry News

FTSE Russell Keeps China A-Shares on Watch List for Possible Inclusion as Secondary Emerging Market
On 29 September 2017, FTSE Russell announced the results of its annual country classification review. Most notably, FTSE Russell maintained China A-Shares on the Watch List for potential inclusion as a Secondary Emerging Market and stated that “the coverage of the Connect programmes, daily quota limits, the number of trading holidays and the comparatively high level of stock suspensions continue to present concerns to international investors.” This is a contrast to MSCI’s decision in June 2017 to include 222 China A-Shares into the MSCI Emerging Market Index, effective from May 2018.

At this review, FTSE Russell reclassified Poland as a “Developed market” from its prior status as an “Advanced Emerging market” and classified Kuwait as a “Secondary Emerging market”. Kuwait had previously been unclassified.

Further details of the annual country classification review can be found here.

FTSE Russell- Enhancing the Industry Classification Benchmark (ICB)
On 6 September 2017, FTSE Russell announced enhancements to its Industry Classification Benchmark (ICB) structure which will take effect on 1 January 2019. As a result of the enhancements, FTSE Russell will expand its current categorization structure to 11 Industries, 20 Supersectors, 45 Sectors and 171 subsectors.

Key specifics are as follows:

  • Addition of “Real Estate” as the 11th ICB Industry, which includes real estate stocks and REITs.
  • Expanding the Telecommunications Industry to include Telecommunications equipment from the Technology industry and Cable Televisionservices from the Media sector
  • Adopting of Consumer discretionary and Consumer Staples industries from the Consumer Services and Consumer Goods industries

 

The FTSE Russell website hosts the press release and a detailed version of the new Industry Classification system. Note that the transition dates of individual FTSE Russell index series will be announced in June 2018

RQFII ETF Watch – Net Outflows in September Totaled Rmb 1.3 Billion

  • RQFII ETFs recorded estimated net outflows of Rmb 1.3 billion in September 2017 (3.5% of beginning and ending AUM). This compares with net inflows of Rmb 1.1 billion in August. This puts the year-to-date estimated net inflows from RQFII ETFs in Hong Kong at Rmb 0.7 billion.
  • The largest net outflows came from the CSOP FTSE China A50 ETF (82822 & 02822), estimated at Rmb 0.9 billion, followed by ChinaAMC CSI 300 Index (83188 & 03188), estimated at Rmb 0.4 billion.
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823), recorded a net outflow of Rmb 0.2 billion in the month of September. This compares with virtually no estimated net outflow/inflow in August. During the first nine months of 2017, we estimate total net outflows from the iShares FTSE A50 China Index ETF were Rmb 5.6 billion.

New Launches and Listings

China Southern List 2 ETFs in China
In September, China Southern Asset Management listed two ETFs on the Shanghai Stock Exchange, tracking the CSI SWS Non-ferrous Metal Index and the CSI All Share Real Estate Index, respectively. 

These listings put the total number of ETFs in China at 166.

Yuanta List 4 ETFs in Taiwan
On 1 September 2017, Yuanta Securities Investment Trust listed 2 leveraged ETFs and 1 Inverse ETF on the Taiwan Stock Exchange. The funds track the S&P GSCI Gold 2x Leveraged Index ER, S&P Japanese Yen Futures 1x Inverse Daily ER Index and S&P Japanese Yen Futures 2x Leverage Daily ER Index, respectively.

On 27 September 2017, Yuanta listed an ETF tracking the TIP TAIEX+ Customized High Dividend Minimum Variance Index.

The listings of these 4 ETFs put the total number of ETFs in Taiwan at 94.

Bangkok Capital Asset Management lists an ETF in Thailand
On 12 September 2017, Bangkok Capital Asset Management listed an ETF on the Stock Exchange of Thailand, tracking the SET 100 Total Return Index. The last ETF listed in Thailand was the BCAP MSCI Thailand ETF, listed more than a year ago in June 2016.

The listing of this ETF puts the total number of ETFs in Thailand at 16.

Hanwha Asset Management lists an Active ETF in Korea
On 26 September 2017, Hanwha Asset Management listed an active ETF on the Korea Exchange (KRX), benchmarked to the the KAP Investable Credit Bond 1Y Index. This is the seventh active ETF listed on the KRX, all are bond ETFs.

 

 

 

About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia