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Asia ETF Roundup (Industry) – June 2018

MSCI to add Saudi Arabia and Argentina to its EM index; An estimated Rmb 0.2 billion flowed into RQFII ETFs.

Jackie Choy 05/07/18

For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) –June 2018”.

ETF Industry News

MSCI to Add Saudi Arabia and Argentina to Emerging Markets Index
On 20 June, MSCI announced it will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, starting from June 2019. Following a 2-step inclusion process, the index will represent a weight of 2.6% in the MSCI Emerging Markets Index on a pro forma basis. The decision was due mainly to the increased opening of the market to international investors.

MSCI also announced its reclassification of the MSCI Argentina Index to Emerging Markets status from Frontier Markets, effective in June 2019. However, the inclusion is restricted to only foreign listings of Argentinian companies. In addition, considering the recent events influencing Argentina’s foreign exchange situation, MSCI highlighted the possible review on the reclassification decision were the Argentinian authorities to introduce any market accessibility restrictions, including capital or foreign exchange controls.

Meanwhile, MSCI decided to include the MSCI Kuwait Index in its 2019 Annual Market Classification Review for a potential reclassification to Emerging Markets status.

China Relaxes QFII and RQFII Rules
On 12 June, the State Administration of Foreign Exchange announced it would relax the qualified foreign institutional investor (QFII) and renminbi qualified foreign institutional investor (RQFII) schemes with immediate effect. The measures include: (1) Revoking the 20% monthly repatriation limit enacted under the QFII scheme; (2) Discarding the 3-month lockup periods for investment principal remittance under both schemes (note that currently, lockup periods are not applicable to RQFII ETFs); and (3) Permitting QFIIs and RQFIIs to place foreign exchange hedges on their Mainland investments owing to foreign exchange movements.

ABF PAIF Adds Securities Lending Capability
On 26 June, State Street Global Advisors, manager of ABF Pan Asia Bond Index Fund (02821, listed in Hong Kong), announced that the fund would enter into securities lending transactions starting from 10 July 2018. In particular, the amount of securities of the same issue which might be lent would be capped at 50%. The loans involved will not exceed 10% of the total assets of the fund. In terms of collateral, collateral value will have to exceed the full value of securities lent, and consist of cash, securities within the index, securities issued by the same issuers as the index constituents and/or other high quality cash equivalent investments. The fund currently receives 70% of the total income from securities lending.

RQFII ETF Watch – Net Inflows Totaled Rmb 0.2 billion in June

  • RQFII ETFs recorded estimated net inflows of Rmb 0.2 billion in June (0.9% of beginning AUM), which compares with net inflows of Rmb 1.6 billion in May. This puts YTD estimated net outflows from RQFII ETFs in Hong Kong at Rmb 3.3 billion.
  • Net inflows came mainly from the ChinaAMC CSI 300 ETF (83188/03188), estimated at Rmb 0.1 billion.
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823/82823), recorded estimated net outflow of Rmb 0.4 billion in June. This puts YTD estimated net outflows from this ETF at Rmb 7.1 billion.

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New Launches and Listings

ChinaAMC, Samsung List 2 ETFs in Hong Kong

On 6 June, China Asset Management listed an ETF, namely the ChinaAMC Bloomberg Barclays China Treasury + Policy Bank Bond Index ETF (02813/82813) on the Stock Exchange of Hong Kong. The ETF tracks the Bloomberg Barclays China Treasury + Policy Bank Index.

On 20 June, Samsung Asset Management listed an ETF, namely the Samsung CSI China Dragon Internet ETF (02812), which tracks the CSI Global China Internet Index. The index is designed to represent the internet and internet-related technology Chinese companies listed in the PRC or overseas. As of 28 May 2018, the index was comprised of 30 constituents, including Alibaba, Baidu and Tencent as the three largest holdings at over 15% weighting each.

These listings put the total number of ETFs listed in Hong Kong at 186 (123 ETFs, 63 multiple counters, including 22 L&I Products).

E Fund Lists an ETF in China

On 1 June, E Fund Management listed an ETF tracking MSCI China A Inclusion RMB Index.

This listing puts the total number of ETFs listed in China at 178 ETFs (54 ETFs on the SZSE, 124 ETFs on the SSE).

Yuanta, Fubon, Cathay, Shin Kong List 8 ETFs in Taiwan

On 1 June, Yuanta Securities Investment Trust listed an ETF on the Taiwan Stock Exchange, which tracks the Dow Jones Commodity Index Silver Excess Return.

On 8 June, Fubon Asset Management listed 2 ETFs on the Taipei Exchange. They track the Bloomberg Barclays US BBB Corporate Bond 10Yr+ Coupon 4.5% exChina Index, and the Bloomberg Barclays US High Yield 1-5 Year Coupon 4% exChina Index, respectively.

On 11 June, Cathay Securities Investment Trust listed 3 ETFs on the Taiwan Stock Exchange. They track the Korea/Taiwan IT Premier Index, the FTSE Emerging Markets China A Inclusion Index, and the Nasdaq CTA Artificial Intelligence and Robotics Index, respectively.

On 22 June, Shin Kong Investment Trust listed an ETF on the Taiwan Stock Exchange, tracking the Tip customized Domestic Demand High Yield Index.

On 27 June, Yuanta Securities Investment Trust listed an ETF on the Taiwan Stock Exchange, which tracks the MSCI China A Inclusion Index.

These listings put the total number of ETFs listed in Taiwan at 130 ETFs.

Samsung, Hanwha, Korea Investment List 4 ETFs in Korea

On 8 June, Samsung Asset Management listed an ETF on the Korea Exchange, tracking the FnKorea 50 Index.

On 8 June, Hanwha Asset Management listed an ETF tracking the F-KTB Index.

On 8 June, Korea Investment listed 2 ETFs tracking the F-LKTB Index and the F-KTB Index, respectively.

These listings put the total number of ETFs listed in Korea at 367 ETFs.

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About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia