Asia ETF Roundup (Industry) – February 2019

MSCI to increase China A-shares weights threefold; HK-domiciled offshore China equity ETFs see small net outflows but small net inflows from onshore China equity ETFs.

Jackie Choy, CFA 07.03.2019
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – February 2019”.

ETF Industry News

MSCI To Increase China A-shares Weights Threefold, Add Mid-caps China A-shares
On 28 February, MSCI announced it will further increase the weight of China A-shares in its mainline benchmarks. The A-share inclusion factor will be increased from 5% to 20% in three steps and will add ChiNext shares and mid-cap A-shares. Here is a summary impact analysis:

  • May 2019 Semi Annual Index Review:
    • Increase inclusion factor to 10% from 5% for large-cap A-shares.
    • Add ChiNext large-caps with a 10% inclusion factor.
  • August 2019 Quarterly Index Review:
    • Increase inclusion factor to 15% from 10% for large-cap A-shares.
  • November 2019 Semi Annual Index Review:
    • Increase inclusion factor to 20% from 15% for large-cap A-shares.
    • Add mid-cap A-shares, including ChiNext shares, with a 20% inclusion factor.
  • After these 3-steps have been taken, there will be 253 large-caps and 168 mid-caps (including 27 ChiNext shares) in MSCI’s mainline indexes
  • China A-shares weighting in many key benchmarks will increase threefold following this 3-stage implementation process:
    • MSCI China Index: From 2.3% to 10.4%.
    • MSCI EM Index: From 0.70% to 3.3%.
    • MSCI AC Asia ex Japan Index: From 0.83% to 4.0%.
    • MSCI ACWI Index: From 0.09% to 0.42%.


According to MSCI, the decision to make these changes via a 3-step process, as opposed to the 2-step process outlined in its original proposal, is intended to help alleviate potential price impact--and was in part a response to investors’ input to its initial proposal.

MSCI Index Constituent Changes
As part of its February 2019 quarterly index review MSCI announced the following constituent changes to its suite of Asian indexes, which will take effect after the market close on 28 February:

  • MSCI China Index: 12 additions, including Xiaomi Corporation (01810).
  • MSCI China A Onshore Index: 4 additions: Aluminum Corp of China (601600), CaiTong Securities (601108), Kingenta Ecological (002470), SDIC Capital (600061).
  • MSCI Taiwan Index: 1 addition: Shanghai Commercial & Saving Bank (5876).


Chinese Equity ETF Watch – HK-Domiciled Offshore Chinese Equity ETFs See Small Net Outflows while Onshore Chinese Equity ETFs See Small Net Inflows

  • Hong Kong-domicilied ETFs in the China Equity Category saw estimated outflows of USD 60 million, coming mainly from the Hang Seng China Enterprises ETF (02828). Meanwhile, ETFs in the China Equity – A-Shares Category saw small estimated inflows of USD 37 million.
  • In the U.S. in February, we saw a smilar trend to that in Hong Kong. There, we saw an estimated USD 45 million of net outflows from the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) and estimated USD 199 million of net inflows into the Xtrackers Harvest CSI 300 China A ETF (ASHR).


190307 China Eq net flow(EN)

New Launches and Listings

Reliance Listed an ETF in India
On 4 February 2019, Reliance listed an ETF on the National Stock Exchange of India, which tracks the Nifty Midcap 150 Index.

KGI and Shin Kong Listed 6 ETFs in Taiwan
On 14 February 2019, KGI Securities Investment Trust listed 3 bond ETFs on the Taipei Stock Exchange. These ETFs track the Bloomberg Barclays US 15+ AAA-A Corp Select Index, the Bloomberg Barclays US Corp 20+ Year Banking Index and the Bloomberg Barclays US Treasury 25+ Year Index respectively.

On 15 February 2019, Shin Kong Financial Holding listed 3 ETFs on the Taiwan Stock Exchange. These ETFs track the China Bond 10-year Treasury and Policy Bank Bond Green Enhanced Index, the NYSE U.S. Core Large Cap Index and the FTSE World Broad Investment-Grade USD Corporate Bond 15+ Years Custom Index, respectively.

These listings put the total number of ETFs listed in Taiwan at 162.

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

190307 New listings Feb 2019(EN)

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About Author

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

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