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Asia ETF Roundup (Industry) – November 2019

MSCI pauses further China inclusion until concerns being addressed; First batch of leveraged/inverse ETFs launched in Malaysia.

Jackie Choy, CFA 05/12/19

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

ETF Industry News

MSCI Completes Adding Mid-cap China A-shares and Increasing Inclusion Factor to 20%; Concerns to be Addressed before Consultation on Further Inclusion

After the market close on 26 November 2019, MSCI completed the third (and final) step of its latest round of announced China A-share inclusion. This final stage involved increasing its inclusion factor to 20% and adding mid-cap A-shares. In a press release, MSCI stated that the launch of a public consultation on further inclusion of China A-shares will be subject to a number of concerns being addressed by the Chinese authorities. The concerns include:

  • Access to hedging and derivatives instruments;
  • Short settlement cycle for China A shares;
  • Trading holidays of Stock Connect; and
  • Availability of Omnibus trading mechanism in Stock Connect.

After the completion of this round of China A-Shares inclusion into MSCI’s international indices, China A-Shares now account for 0.5%, 4% and 12% of the MSCI ACWI, the MSCI EM index and the MSCI China Index, respectively. In total, China now accounts for 4% and 34% of the MSCI ACWI and the MSCI EM Indices, respectively.

Chinese Equity ETF Watch – HK-Domiciled Onshore and Offshore Chinese Equity ETF See Combined Net Outflows of USD 0.2 billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated outflows of USD 92 million in November, coming mainly from the Hang Seng China Enterprises Index ETF (02828/82828). Meanwhile, ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 141 million, coming mainly from the iShares FTSE A50 China Index ETF (02823/82823).
  • For the first eleven months of 2019, Hong Kong-domiciled ETFs in the China Equity Category saw estimated outflows of USD 0.9 billion, while ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 2.4 billion.
  • In the U.S. in November, we saw an estimated USD 179 million of net inflows from the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) and an estimated USD 60 million of net outflows from the Xtrackers Harvest CSI 300 China A ETF (ASHR).

New Launches and Listings

iShares and CSOP to Delist 4 ETFs in Hong Kong

CSOP China CSI 300 Smart ETF (03129/83129) had its last trading day on the Hong Kong Exchange on 22 November. Under the trust deed of the fund, the manager has the discretion to terminate the fund if the total net asset value of the fund shall be less than Rmb 100 million. As of 22 October, the fund’s total net asset value was Rmb 13.4 million. This fund was listed in October 2015.

Three iShares ETFs, namely the iShares DAX Index ETF (03149/83146/09146), the iShares EURO STOXX 50 Index ETF (03155/83155/09155) and the iShares FTSE 100 Index ETF (02847/82847/09847) had their last trading day on the Hong Kong Exchange on 28 November. Small total net asset value and relatively low trading volume of these funds were cited as main factors in determining the termination of these funds. As of 25 October, the funds’ total net assets were EUR 3.5 million, EUR 3.9 million and GBP 2.5 million respectively. These funds were listed in June 2016.

Excluding these ETFs, the total number of ETF listings in Hong Kong stands at 201 (130 ETFs, 71 multiple counters, including 24 L&I Products).

Affin Hwang Listed 4 L/I ETFs in Malaysia

On 29 November, Affin Hwang Asset Management listed Malaysia’s first batch leveraged/inverse ETFs on the Bursa Malaysia. These 4 leveraged/inverse ETF tracks the NYSE® FANG+™ Daily 2x Leveraged Index, the NYSE® FANG+™ Daily 1x Inverse Index, the Hang Seng China Enterprises Futures 2x Leveraged Index and the Hang Seng China Enterprises Futures Short Index, respectively.

These listings put the total number of ETFs listed in Malaysia at 16.

Founder Fubon, China AMC, Penghua, Ping An, Fullgoal, SWS MU, Dacheng, Yinhua Listed 8 ETFs in China

On 1 November, Founder Fubon Fund Management listed an ETF on the Shanghai Stock Exchange. The ETF tracks the CSI 300 Index.

On 7 November, China AMC listed an ETF on the Shanghai Stock Exchange. The ETF tracks the CSI All Share Investment Banking & Brokerage Index.

On 8 November, Penghua Fund Management listed a bond ETF on the Shenzhen Stock Exchange. The ETF tracks the CSI 5-Year Local Government Bond Index.

On 11 November, Ping An Fund Management and Fullgoal Asset Management listed two ETFs on the Shanghai Stock Exchange. The ETF tracks the CSI Greater Bay Area Development Thematic Index and the CSI Consumer 50 Index, respectively.

On 15 November, SWS MU Fund Management listed an ETF on the Shanghai Stock Exchange. The ETF tracks the CSI Innovation 100 Index.

On 18 November, Dacheng Fund Management listed an ETF on the Shanghai Stock Exchange. The ETF tracks the MSCI China A Custom Quality Value 100 Index.

ON 18 November, Yinhua Fund Management listed an ETF on the Shenzhen Stock Exchange. The ETF tracks the CSI Innovation 100 Index.

These listings put the total number of ETFs listed in China at 246 (67 ETFs on the SZSE, 179 ETFs on the SSE).

Shin Kong, Yuanta, Cathay Listed 4 ETFs in Taiwan

On 15 November, Shin Kong Investment Trust listed a bond ETF on the Taipei Exchange. This ETF tracks the ICE BofAML 15+ Year A-BBB US Telecommunications Index.

On 19 November, Yuanta Securities Investment Trust and Shin Kong Investment Trust listed two ETFs on the Taiwan Stock Exchange. The ETFs track the ICE FactSet Global NextGen Communications Index and the Shiller Barclays CAPE® US Sector Value Net TR Index, respectively.

On 25 November, Cathay Securities Investment Trust listed a bond ETF on the Taiwan Stock Exchange. The ETF tracks the Bloomberg Barclays US Treasury Coupon Index.

These listings put the total number of ETFs listed in Taiwan at 221, of which 97 of them are bond ETFs.

Samsung Listed 4 ETFs in Korea

On 14 November, Samsung Asset Management listed 4 ETFs on the Korea Exchange. These ETFs track the FnGuide Multi-Factor Index, the KOSPI LargeCap Index, the KOSPI 200 ESG Index and the KOSPI 200 Ex-TOP Index, respectively.

These listings put the total number of ETFs listed in South Korea at 449.

ETFs Launched in November 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