Asia ETF Roundup (Industry) – September 2020

FTSE Russell to include China government bonds in its international indices; BMO reportedly to exit Hong Kong ETF market.

Jackie Choy, CFA 12.10.2020
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – September 2020”.

ETF Industry News

FTSE Russell to Include China Government Bonds in its International Index

On 24 September, FTSE Russell announced it will include China government bonds in the FTSE World Government Bond Index. The inclusion process will start in October 2021 and take place over a 12-month period. Final confirmation and details will be announced in March 2021, subject to the efficacy of new reforms in the following areas: (1) the account opening process (including the ability to register at legal entity level); (2) the ability to transact FX with third parties; and (3) the changes to the settlement process to allow settlement beyond T+3.

Note that Bloomberg Barclays and JP Morgan have included Chinese government bonds in the Bloomberg Barclays Global-Aggregate Index since April 2019 and the JPMorgan Government Bond Index-Emerging Markets since February 2020, respectively. According to FTSE Russell, the Chinese authorities have implemented significant improvements to the fixed income market infrastructure including improving secondary market bond liquidity, enhancing foreign exchange market structure and developing global settlement and custody processes. The index announcement can be found here.

BMO Will Reportedly Exit the Hong Kong ETF Market

According to Ignites Asia, BMO plans to exit Hong Kong’s ETF market. China Asset Management (Hong Kong) will, reportedly, take over all seven of BMO’s Hong Kong-listed ETFs. BMO first listed three ETFs in November 2014 on the Hong Kong Stock Exchange and currently operates 7 ETFs in Hong Kong with assets under management ranging from USD 1 million to USD 217 million as of the end of September 2020. The ETFs offer exposure to U.S. Nasdaq, Japanese equities, European equities, Asia real estate equities, Asia high dividend equities, Hong Kong banks and Asia bonds. China Asset Management (Hong Kong) currently manages a total of USD 2.1 billion (as of the end of September 2020) in 5 ETFs and 7 leveraged/inverse products in Hong Kong.

Chinese Equity ETF Watch – Hong Kong-Domiciled Onshore Chinese Equity ETFs See Estimated Net Outflows of USD 0.5 Billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated net inflows of USD 57 million in September, coming mainly from Hang Seng China Enterprises Index ETF (02828), estimated at USD 105 million, netted off by the net outflows from the iShares Core MSCI China ETF (02801), estimated at USD 38 million.
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw estimated net outflows of USD 504 million in September, coming mainly from the CSOP FTSE China A50 ETF (02822/82822) the iShares FTSE A50 China ETF (02823/82823) and the ChinaAMC CSI 300 Index ETF (03188/83188), each recorded net outflows estimated at USD 116 million to USD 186 million.
  • Hong Kong-domiciled ETFs in the China Equity Category and the China Equity – A-Shares Category saw estimated year-to-date outflows of USD 0.6 billion and USD 2.1 billion, respectively.
  • In the U.S. in September, we estimate net inflows of USD 52 million from Chinese equity ETFs. The KraneShares CSI China Internet ETF (KWEB) saw net inflows estimated at USD 187 million while the Xtrackers Harvest CSI 300 China A ETF (ASHR) saw net outflows of USD 117 million.

201008 China ETFFlows Sep 20(EN)

New Launches and Listings

China: 8 ETF New Listings

  • Chinese ETF providers listed 8 new ETFs on the Shanghai Stock Exchange and Shenzhen Stock Exchange, including 2 broad market ETFs, 3 thematic ETFs, 2 bond ETFs and a gold ETF.  
  • These listings put the total number of ETFs listed in China at 358 (108 ETFs on the SZSE, 250 ETFs on the SSE).

Hong Kong: 3 ETF New Listings; 2 Delistings

  • Hong Kong ETF providers, including ChinaAMC, iShares and Hang Seng Investment Management listed 3 ETFs tracking the Hang Seng TECH Index.
  • A pair of leveraged/inverse products managed by ChinaAMC had their last trading day on 1 September. These products track the -1x and 2x of the daily performance of the Hang Seng China Enterprises Index and were listed in March 2017, having a total AUM of USD 6.14 million as of 31 August. Small asset size was cited as the main reason leading to the delisting of the two leveraged/inverse ETFs.
  • Including the above delistings and listings, the total number of ETFs in Hong Kong stands at 218 (138 ETFs and 80 multiple counters, including 26 leveraged and inverse products).

Singapore: 1 ETF New Listing

  • CSOP Asset Management cooperated with ICBC Asset Management to list an ETF that offers Chinese Government Bond exposures on the Singapore Exchange.

India: 1 ETF New Listing

  • UTI Asset Management listed an ETF that offers exposures to Indian banks.

South Korea: 5 ETF New Listings

  • Korean ETF providers listed 2 passively managed ETFs on the Korea Exchange.
  • Samsung Asset Management and Mirae Asset listed three actively managed ETFs.
  • These listings put the total number of ETFs listed in South Korea at 454.

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

201008 Asia New Listings Sep 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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