Asia ETF Roundup (Industry) – June 2015

MSCI Not Adding A-Shares to Global Benchmarks, but “On Track for Inclusion”
On 9 June 2015, MSCI announced the results of its 2015 Market Classification Review. One of the key decisions was to not include A-Shares in its global benchmarks at this time. The firm cited a number of concerns including, but are not limited to, (1) quota allocation process, (2) capital mobility restrictions and (3) beneficial ownership of investment. MSCI cited that it may announce it will include China A-Shares in the MSCI Emerging Markets Index as soon as the issues are resolved, and that this may happen outside the regular schedule of its annual Market Classification Review.

In the announcement, MSCI also announced it would include the MSCI Pakistan Index in its 2016 Annual Market Classification Review for a potential reclassification to emerging-markets status. Also, the firm will seek feedback from investors before considering adding the MSCI Saudi Arabia Index to the review list for potential inclusion in the MSCI Emerging Markets Index.

S&P Dow Jones Indices Launches Consultation on Annual Country Classification Review – China A-Shares Under Review
On 18 June 2015, S&P Dow Jones Indices launched a consultation on its annual country classification review, in which the classification of China A-Shares is under review. The firm is seeking responses by 21 August 2015. China A-Shares are currently not eligible for any of the standard S&P Dow Jones Global Benchmark Indices. As illustrated in the consultation document, China (all non-A-Shares) currently accounts for 31.14% of the S&P Emerging BMI. If A-Shares are included in full, the total weight of China within the S&P Emerging BMI will be increased to 60.16% (18.01% in non A-Shares; 42.15% in A-Shares).

Hungary Granted with Rmb 50 Billion RQFII Quota
During the month, Hungary was granted RQFII quota (Rmb 50 billion) which will enable qualified institutional investors in Hungary to invest directly into the China securities market. Other countries with RQFII quota include: Hong Kong (Rmb 270 billion), Taiwan (Rmb 100 billion; received a favourable response from the Chinese government but have not yet been officially granted quota), the UK (Rmb 80 billion), Singapore (Rmb 50 billion), France (Rmb 80 billion), South Korea (Rmb 80 billion), Germany (Rmb 80 billion), Qatar (Rmb 30 billion), Canada (Rmb 50 billion), Australia (Rmb 50 billion), Switzerland (Rmb 50 billion), Luxembourg (Rmb 50 billion) and Chile (Rmb 50 billion).

Deutsche Bank Credit Rating Downgraded to “BBB+” from “A” by S&P
On 9 June 2015, S&P downgraded the credit rating of Deutsche Bank AG to “BBB+” from “A”. In May, Fitch also downgraded Deutsche Bank’s credit rating to “A” from “A+”. Deutsche Bank is the swap counterparty of the suite of synthetic db X-trackers ETFs and one of the A-share access products (AXPs) issuers of the W.I.S.E. - CSI 300 China Tracker (02827).

RQFII ETF Watch – Net Inflows at Rmb 3.2 billion  

• In June, we saw RQFII ETFs recorded net inflows, estimated at Rmb 3.2 billion (7.5% of beginning and 7.3% of ending AUM), after Rmb 0.3 billion of net inflows in May 2015. YTD total net outflows were estimated at Rmb 16.0 billion.
• The majority of the net inflows during the month came from the CSOP FTSE China A50 ETF (82822 & 02822), estimated at Rmb 3.2 billion, followed by the ChinaAMC CSI 300 Index ETF (83188 & 03188), estimated at Rmb 0.9 billion. On the other hand, the majority of the net outflows came from the CSOP China 5-Year Treasury Bond ETF (83199 & 03199), estimated at Rmb 1.2 billion.
• The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823), continued to see net outflows, estimated at Rmb 2.3 billion in June. YTD total net outflows were estimated at Rmb 35.6 billion.

New Launches and Listings

KB Asset Lists an ETF in Korea
On 2 June 2015, KB Asset Management listed an ETF on the Korea Stock Exchange (KRX). The ETF, namely the KStar SYNTH-US Oil&Gas E&P(H) ETF, tracks the S&P Oil & Gas Exploration & Production Select Industry Index.

Shinhan BNP Paribas List an ETF in Korea
On 8 June 2015, Shinhan BNP Paribas listed an ETF on the KRX. The ETF, namely the SMART Synth-CSI500(H) ETF, tracks the CSI 500 Small Cap Index.

Fubon Lists an ETF in Taiwan
On 9 June 2015, Fubon asset management listed an ETF on the Taiwan Stock Exchange. The ETF, namely the Fubon SZSE 100 Index ETF (00639), tracks the SZSE 100 Index.

The listing of this ETF puts the total number of ETFs listed in Taiwan at 30.

Mirae Lists an inverse ETF in Korea
On 10 June 2015, Mirae Asset listed an ETF on the KRX. The ETF, namely the TIGER SYNTH-China A Inverse ETF (A217780), tracks the inversed daily performance of the CSI300 Index. This is the first inverse ETF listed on the KRX tracking a China A-Share Index.

Huatai-Pinebridge Lists an ETF in China
On 12 June 2015, Huatai-Pinebridge listed an ETF on the Shanghai Stock Exchange. The ETF, namely the Huatai-Pinebridge CSI 500 ETF (512510), tracks the CSI 500 Index.

Bosera Lists an ETF in China
On 15 June 2015, Bosera listed an ETF on the Shanghai Stock Exchange. The ETF, namely the Bosera SSE 50 ETF (510710), tracks the SSE 50 Index.

CR Yuanta Lists an ETF in China
On 25 June 2015, CR Yuanta Fund listed an ETF on the Shenzhen Stock Exchange, namely the CR Yuanta SME-ChiNext 100 ETF (159942). The ETF tracks the SME-ChiNext 100 Index, which The SME-ChiNext 100 Index is intended to track the performance of the 100 largest and most liquid A-share stocks listed and trading on the Small and Medium Enterprise (SME) Board and the ChiNext Board of the Shenzhen Stock Exchange.

This listing, together with the listings of the Huatai-Pinebridge ETF and the Bosera ETF, put the number of ETFs listed in China at 111.

Samsung Lists a Strategic-Beta ETF in Korea
On 26 June 2015, Samsung Asset Management listed a strategic-beta ETF on the KRX, namely the KODEX 200 Intrinsic Value ETF (A223190). The ETF tracks the KOSPI 200 Intrinsic Value Index which is designed to track the performance of a set of securities listed on the KRX that show low beta. Constituents are weighted by intrinsic value.

Hanwha Lists 4 Strategic Beta ETFs in Korea
On 29 June 2015, Hanwha Asset Management listed four strategic beta ETFs on the KRX. They track the S&P KOREA Dividend Opportunity Index, Wise Smartbeta Value Index, Wise Smartbeta Momentum Index, Wise Smartbeta Quality Index.

The listing of these ETFs and the other ETFs listed in Korea earlier in the month put the total number of ETFs listed in Korea at 176.

List of ETFs Launched in Jun 2015