Asia ETF Roundup (Industry) – July 2020

Hong Kong-Shenzhen feeder ETFs to come? First feeder ETF launched in Hong Kong; First A-Shares leveraged/inverse products launched in Hong Kong

Jackie Choy, CFA 06.08.2020
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – July 2020”.

ETF Industry News

Hong Kong-Shenzhen Feeder ETFs to Come?

According to Ignites Asia, the Hong Kong Exchange and Shenzhen Stock Exchange are planning to roll out a pilot scheme that will allow locally listed vehicles to feed into ETFs that are listed on the opposing exchange. According to the report, the scheme may be rolled out as soon as August 2020. Reportedly, two pairs of ETF providers are working together under this new scheme, namely Hang Seng Investment Management and Harvest Fund Management; CSOP Asset Management and Yinhua Fund Management. 

The master-feeder ETF structure requirements in Hong Kong were streamlined in December 2019 and the first feeder ETF was listed in Hong Kong in July. In addition, there was also the “Japan-China ETF connectivity” scheme which allowed Japanese or Chinese ETF providers to create a feeder ETF that would mainly invest in the counterparty's ETF, with the first batch of such ETFs launched in June 2019. The Hong Kong-Shenzhen ETF link scheme is likely to resemble the Japan-China ETF connectivity. This could represent a workaround of the Hong Kong-China ETF Connect scheme that was first announced in 2016 but has not progressed since.

Chinese Equity ETF Watch – HK-Domiciled ETFs See Estimated Net Inflows of Less Than USD 0.2 Billion; U.S. Domiciled ETFs See Estimated Net Inflows of USD 1.5 billion.

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated net inflows of USD 42 million in July. The net outflows of USD 128 million from the Hang Seng China Enterprises Index ETF (02828) almost netted off the net inflows from the iShares Core MSCI China ETF (02801) and Global X China Electric Vehicle ETF (02845), estimated at USD 101 and USD 61 milllion, respectively.
  • Hong Kong-domiciled ETFs in the China Equity -A-Shares Category saw estimated net inflows of USD 122 million in July, coming mainly from the ChinaAMC CSI 300 Index ETF (03188/83188), the CSOP SZSE ChiNext ETF (03147/83147) and Premia CSI Caixin China New Economy ETF (03173/09173).
  • During the first seven months of 2020, Hong Kong-domiciled ETFs in the China Equity Category and the China Equity – A-Shares Category saw estimated outflows of USD 0.6 billion and USD 1.5 billion, respectively.
  • In the U.S. in July, Chinese equity ETFs saw net inflows of around USD 1.5 billion. Net inflows to the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) totaled an estimated USD 0.2 billion. The Xtrackers Harvest CSI 300 China A ETF (ASHR) saw net inflows of USD 0.7 billion.

 200806 China ETFFlows Jul 20(en)

New Launches and Listings

 7 ETF New Listings in China

  • Chinese ETF providers listed 7 ETFs on the Shanghai Stock Exchange and Shenzhen Stock Exchange, including 3 broad market ETFs, 2 thematic/sector ETFs, a strategic-beta ETF, and a gold ETF.   
  • These listings put the total number of ETFs listed in China at 342 (102 ETFs on the SZSE, 240 ETFs on the SSE).
     

First Feeder ETF and A-shares Leveraged/Inverse Products in Hong Kong

  • iShares listed Hong Kong’s first feeder ETF. The feeder ETF invests primarily in the master ETF, iShares MSCI EM UCITS ETF USD (Dist). The master ETF is domiciled in Ireland and listed on various exchanges in Europe.
  • CSOP Asset Management and China Asset Management listed Hong Kong’s first batch of A-shares leveraged/inverse products. The managers each listed a pair of leveraged and inverse products that track the 2x and -1x daily performance of the CSI 300 Index, using a swap-based synthetic replication strategy.
  • These listings put the total number of ETFs listed in Hong Kong at 215 (138 ETFs, 77 multiple counters, including 30 L&I Products).
     

1 ETF New Listing in Malaysia

  • Affin Hwang Asset Management listed a strategic-beta ETF that offers Asia ex-Japan REITs.
  • This listing put the total number of ETFs in Malaysia at 18.

3 ETF New Listings in South Korea

  • South Korean ETF providers listed 3 ETFs on the Korea Exchange, including a broad market equity ETF, a synthetic ETF tracking certificate of deposit exposures and an active bond ETF.
  • These listings put the total number of ETFs listed in South Korea at 447.

3 ETFs New Listings in Taiwan

  • Taiwan ETF providers listed 3 ETFs on the exchanges in Taiwan, including a technology-themed ETF, a 5G communication themed ETF, and an ESG ETF.
  • These listings put the total number of ETFs listed in Taiwan at 221, of which 99 are bond ETFs.

ETFs Launched in July 2020 in the Asia ex-Japan Region

200806 Asia New Listings Jul 20(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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