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Asia ETF Roundup (Industry) – April 2019

Japan-China ETF connectivity; First 10 ETNs listed in Taiwan; HK-domiciled offshore Chinese equity ETFs see net inflows of USD 258 million while onshore Chinese equity ETFs see net outflows of USD 434 million

Jackie Choy, CFA 09/05/19

For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – April 2019”.

ETF Industry News

Japan-China ETF Connectivity Established between JPX and SSE

On 22 April 2019, Japan Exchange (JPX) and Shanghai Stock Exchange (SSE) announced the establishment of the "Japan-China ETF Connectivity", a scheme for creating ETFs that link the two exchanges’ ETF markets.

Under the scheme, after obtaining special investment quotas through the Qualified Foreign Institutional Investor (QFII) or the Qualified Domestic Institutional Investors (QDII) scheme, a Japanese or Chinese ETF provider will be able to create a feeder ETF that mainly invests in the counterparty's ETF. The feeder ETF would need to invest at least 90% of its AUM into the counterparty’s ETF. To qualify, the counterparty’s ETF needs to have been listed for more than one year, have ample liquidity, and must track an equity index. An illustration of the scheme can be found here.

Taiwan Listed First 10 ETNs

On 30 April 2019, 10 exchange traded notes (ETNs) were first listed in Taiwan, of which seven of them were listed on the Taiwan Stock Exchange and three of them were listed on the Taipei Exchange, issued by nine fund companies. Of these nine issuers, seven of them also have ETF businesses in Taiwan, namely Capital Securities, Fubon Securities, KGI Securities, Mega Holding, SinoPac Financial Holdings, Uni-President Securities and Yuanta Securities.

While ETNs are index-tracking vehicles, ETNs are different from ETFs in structure and formation. Specifically, they are uncollateralised debt instruments with expiry dates. Investors should understand ETNs’ structure and terms before making an investment decision.

Chinese Equity ETF Watch – HK-Domiciled Offshore Chinese Equity ETFs See Net Inflows of USD 258 million while Onshore Chinese Equity ETFs See Net Outflows of USD 434 million

  • Hong Kong-domicilied ETFs in the China Equity Category saw estimated inflows of USD 258 million in April, coming mainly from the Hang Seng China Enterprises ETF (02828). Meanwhile, ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 434 million in April, coming mainly from the iShares FTSE A50 China ETF (02823/82823) and the CSOP FTSE China A50 ETF (02822/82822).
  • During the first four months of 2019, Hong Kong-domicilied ETFs in the China Equity Category saw estimated outflows of USD 532 million, while ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 344 million.
  • In the U.S., in April, we saw an estimated USD 296 million of net inflows into the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) and estimated USD 54 million of net inflows into the Xtrackers Harvest CSI 300 China A ETF (ASHR).

 

New Launches and Listings

EIP Delisted 3 Remaining XIE Shares ETFs in Hong Kong

Enhanced Investment Products (EIP), with “XIE Shares” as its ETF brand, delisted its three remaining ETFs from the Hong Kong Stock Exchange on 3 May 2019. EIP stated that the small size of the funds as the main factor for the closures. These ETFs track the FTSE Gold Mines Net Tax Index, the FTSE China N Shares All Cap Capped Net Tax Index and the FTSE N Share 2x Daily Leveraged Index respectively.

This puts the total number of ETF listings in Hong Kong at 200 (130 ETFs, 70 multiple counters, including 22 L&I Products).

Yuanta, Capital Investment Trust, CTBC, Shin Kong Listed 11 Bond ETFs in Taiwan

During the month, Yuanta, Capital Investment Trust, CTBC, Shin Kong added 11 bond ETFs to the ETF menu in Taiwan on the Taipei Exchange. Of these 11 ETFs, three track the US treasury, four are sector bond ETFs, one tracks a US corporate bond index, one tracks a China corporate bond index and two of them track the China treasury/policy bank bonds. 

These listings put the total number of ETFs listed in Taiwan at 182, of which 66 of them are bond ETFs.

China AMC, Ping An, Yinhua Fund, ZhongRong listed 4 ETFs in China

On 18 April, China AMC listed an ETF on the Shenzhen Stock Exchange. The ETF tracks the Sichuan SOEs Reform Index.

On 19 April, Ping An Asset Management listed an ETF on the Shenzhen Stock Exchange. The ETF tracks the ChiNext Price Index.

On 24 April, ZhongRong Fund Management listed an ETF on the Shenzhen Stock Exchange. The ETF tracks the CCTV 50 Index.

On 30 April, Yinhua Fund Management listed an ETF in the Shanghai Stock Exchange. The ETF tracks the MSCI China A RMB Index.

These listings put the total number of ETFs listed in China at 206 (59 ETFs on the SZSE, 147 ETFs on the SSE).

Mirae, Korea Investment, Amundi Listed 6 ETFs in South Korea

On 9 April, Mirae Asset listed an ETF on the Korea Exchange. It tracks the S&P GSCI Gold Index.

On 16 April, Korea Investment Management listed 3 ETFs. These ETFs track the FnGuide Smart High Beta Index-KRW, the FnGuide Smart Low Volatility Index-KRW and the FnGuide Smart Quality Index-KRW respectively.

On 23 April, Amundi Asset Management listed 2 ETFs. These ETFs track the FnGuide E-Commerce Index and FnGuide High Dividend Alpha Index respectively.

These listings put the total number of ETFs listed in Korea at 428.

ETFs Launched in April 2019 in the Asia ex-Japan Region 

About Author Jackie Choy, CFA

Jackie Choy, CFA  

Jackie Choy, CFA is the Director of ETF Research for Morningstar Investment Management Asia