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Asia ETF Roundup (Industry) –April 2018

Bursa Malaysia enhances disclosures for ETFs; Stock Connects’ daily quota quadrupled; HKEx expands Listing Rules to allow dual-class shares; China grants new QDII quota after a 3-year halt.

Jackie Choy 10/05/18

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

ETF Industry News

Bursa Malaysia Becomes Approving Authority for New Issue of Securities by Listed CIS and Business Trusts; Enhances Disclosures for ETFs
Following the review of the Collective Investment Schemes (CIS) framework, Bursa Malaysia announced on April 2 that ETFs will require additional disclosure rules. The disclosure rules will affect quarterly reports and annual reports. For quarterly reports, ETFs will have to include details of their portfolios based on country, industry, and asset class classification, a review on how the ETF has performed against benchmark indicators and future prospects and key financial information. For annual reports, ETFs will have to include a discussion on the fund’s performance as well as the investment portfolio, and other non-financial disclosures. These enhancements for the quarterly and annual reports will be effective on or after 30 June 2018 and 31 December 2018, respectively. In addition, the Bursa Malaysia has become the new approving authority for new issuance of securities by listed collective investment schemes (CIS; including ETFs, REITs and closed-end funds) and business trusts.

China-Hong Kong Stock Connects’ Daily Quota Quadrupled
On 11 April, the China Securities Regulatory Commission and Hong Kong’s Securities and Futures Commission announced that the daily quotas for the Stock Connects would be quadrupled. The Northbound daily quota will increase from Rmb 13 billion for each of the Stock Connects (Shanghai and Shenzhen) to Rmb 52 billion and the Southbound daily quota will be increased from Rmb 10.5 billion for each of the Stock Connects to Rmb 42 billion. These expansions took effect on 1 May 2018, a month ahead of MSCI’s inclusion of Chinese A-Shares into its Emerging Markets Index, which will be implemented on 1 June 2018.

HKEx Expands Main Board Listing Rules – Dual-class Shares Allowed
Following rounds of consultation, the HKEx added 3 new chapters to the Main Board Listing Rules, effective from 30 April 2018. The changes are as follows:

  • Biotech issuers that do not meet the Main Board’s financial eligibility tests are permitted for a listing.
  • Companies with weighted voting right (WVR) structures are permitted for a listing.
  • A new secondary listing route for Greater China and international companies that wish to secondary list in Hong Kong.

New QDII Quotas Granted after a Three-Year Halt
During the month, the State Administration of Foreign Exchange granted additional Qualified Domestic Institutional Investors (QDII) quotas of US$8.34 billion to 24 institutions, after a three-year halt. As a result, the outstanding QDII quota totaled US$98.33 billion.

RQFII ETF Watch – Net Inflows Totaled Rmb 0.7 billion in April

  • RQFII ETFs recorded estimated net inflows of Rmb 0.7 billion in April 2018 (2.5% of beginning AUM), which compares with net outflows of Rmb 1.5 billion in March. This puts YTD estimated net outflows from RQFII ETFs in Hong Kong at Rmb 5.2 billion.
  • Net inflows came mainly from the ChinaAMC CSI 300 ETF (83188/03188), estimated at Rmb 0.7 billion
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823/82823), recorded a modest inflow in April, estimated at Rmb 0.1 billion. This puts YTD estimated net outflows from this ETF at Rmb 7.7 billion.

 

 

New Launches and Listings

Vanguard Adds RMB and USD Counter to 5 ETFs Listed in Hong Kong
During the month, Vanguard added RMB and USD Counter to 5 ETFs listed in Hong Kong. These ETFs include Vanguard FTSE Asia ex Japan High Dividend Yield Index ETF (03085; 83085; 09085), Vanguard FTSE Asia ex Japan Index ETF (02805; 82805; 09805), Vanguard FTSE Developed Europe Index ETF (03101; 83101; 09101), Vanguard FTSE Japan Index ETF (03126; 83126;09126), and Vanguard S&P 500 Index ETF (03140;83140;09140).

CICC Lists an ETF in Hong Kong
On 10 April 2018, China International Capital Corporation (CICC) listed an ETF on the Hong Kong Stock Exchange, which tracks the CSI China Internet Index. Recall that that CICC had an ETF listed on the HKEx but ceased trading from June 2012. This ETF is the first ETF launched by CICC after its acquisition of KraneShares. Krane Funds Advisors (using the KraneShares brand name) is the sub-manager of this ETF.

This listing puts the total number of ETFs listed in Hong Kong at 182(121 ETFs, 61 multiple counters, including 22 L&I Products).

CSOP, Mirae Delists 6 ETFs in Hong Kong
On 3 April, CSOP Asset Management announced that 3 ETFs will be delisted from the Hong Kong Stock Exchange. CSOP will first delist CSOP MSCI T50 ETF (03021) after 3 May 2018. CSOP will then delist Nifty 50 Daily (2x) Leveraged Product ETF (07202) and CSOP Nifty 50 Daily (-1x) Inverse Product (07335) after 3 July 2018. The relatively low net asset value was cited as the main reason for the delistings.

Mirae Asset delisted 3 leveraged and inverse ETFs (07222; 07225; 07315) from the Stock Exchange of Hong Kong on 23 April. The relatively low net asset value was cited as the main reason for the delistings.

Samsung, Mirae, Shinhan, KIWOOM List 7 ETFs in Korea
On 13 April, Samsung Asset Management listed an ETF on the Korea Exchange, which tracks the F-KTB Index.

On 17 April, Mirae Asset listed 4 ETFs (1x, 2x, -1x and -2x) that are benchmarked to the F-JPYKRW Index.

On 23 April, Shinhan BNP Paribas and KIWOOM Asset Management each listed an ETF that tracks the KOSPI 200 TR Index.

These listings put the total number of ETFs listed in Korea at 356 ETFs.

First, Fuh List 3 ETFs in Taiwan
On 18 April, First Securities Investment trust listed two ETFs on the Taiwan Stock Exchange. They track the TIP TAIEX+ Industry Elite 30 Index and TIP TAIEX+ Industry Elite 30 Index Daily Return Inverse -1X Index, respectively.

On 20 April, Fuh Hwa Securities Investment Trust listed an ETF which tracks the FTSE Taiwan High Dividend Low Volatility Index.

These listings put the total number of ETFs listed in Taiwan at 119 ETFs.

Fullgoal, GF, China Southern List 3 ETFs in China
On April 26, Fullgoal Asset Management listed an ETF on the Shanghai Stock Exchange that tracks the CSI 10-year T-bond Index.

On April 27, GF Fund and China Southern Asset Management listed 2 ETFs in the Shanghai Stock Exchange. They track the Shanghai Composite 10Y T-BOND Index and the MSCI China A Inclusion Index, respectively.

These listings put the total number of ETFs listed in China at 170 ETFs (54 ETFs on the SZSE, 116 ETFs on the SSE).

 

About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia