Asia ETF Roundup (Industry) – November 2018

HSCEI enhancement proposal to remove the fix on number of Red/P-chip constituents; RQFII ETFs see estimated net inflows of Rmb 2.6 billion.

Jackie Choy, CFA 06 December, 2018 | 8:45
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – November 2018”.

ETF Industry News

HSCEI Enhancement Proposal to Remove the Fix on Number of Red/P-chip Constituents

On 23 November 2018, Hang Seng Indexes announced a proposal to further enhance the Hang Seng China Enterprises Index (HSCEI) by removing the fix on the number of Red/P-chip constituents (currently fixed at 10) while keeping the total number of constituents at 50. Recall that the HSCEI is currently undergoing an enhancement to increase the weightings of the 10 Red/P-chip constituents in five stages between March 2018 and March 2019, putting the weighting of Red/P-chip constituents at 33.1% by March 2019.

The new proposal suggests increasing the split between Red/P-chips and H-shares to 15/35 in June 2019, 20/30 in September 2019 and no fixed number in December 2019. The index provider estimates that the proposed changes would increase the weighting of Red/P-chip constituents from 33.1% to 41.0% in December 2019, while increasing HSCEI’s coverage of mainland securities in Hong Kong by 3.2 percentage points to 56.8%. The proposal also suggests relaxing the listing history requirements (fast entry mechanism) for the top 10 and top 11-20 Red/P-chips from three years to one year and two years, respectively.

The details of the proposal can be found here. The consultation will be open until 31 December 2018 and the result will be announced in January 2019.

Malaysia Allows Wider Range of ETFs, Including Leveraged/Inverse ETFs

On 26 November 2018, the Security Commission Malaysia (SC) revised its Guidelines on Exchange Trade Funds to allow for the issuance of a wider range of ETFs, including futures-based ETFs (including leveraged/inverse ETFs), synthetic ETFs and commodity ETFs. In the SC’s media release, it stated it expects the revised guideline would boost retail participation in ETFs. The revised guidelines will come into effect on 2 January 2019 and can be found here.

It is worth mentioning that the revised guideline allows a maximum factor of 2x for leveraged ETFs and -1x for inverse ETFs. In addition, prospective retail investors must meet certain pre-qualification criteria before they can invest in leveraged/inverse ETFs.

RQFII ETF Watch – Net Inflows Totaled Rmb 2.6 Billion in November

  • RQFII ETFs recorded estimated net inflows of Rmb 2.6 billion in November (10.0% of beginning AUM), which compares with net inflows of Rmb 1.5 billion in October. This more than level out the net outflows in the first ten months, putting YTD estimated net inflows from RQFII ETFs in Hong Kong at Rmb 0.2 billion.
  • Net inflows came mainly from the CSOP FTSE China A50 ETF (82822 & 02822), estimated at Rmb 1.3 billion and the ChinaAMC CSI 300 Index ETF (83188 & 03188), estimated at Rmb 1.2 billion.
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823/82823), recorded estimated net inflows of Rmb 1.8 billion in November. This follows estimated net inflows of Rmb 1.0 billion in October. November’s inflows further narrow YTD estimated net outflows from this ETF to Rmb 1.7 billion.

181206 RQFII net flow(EN)

New Launches and Listings

CR Yuanta Fund Delists an ETF in China

On 6 November, an ETF managed by CR Yuanta Fund, which tracked the SME-ChiNext 100 Index, ceased trading on the Shenzhen Stock Exchange.

On 26 November, an ETF managed by Hwabao WP Fund Management, which tracked the SSE 180 Growth Index, ceased trading on the Shanghai Stock Exchange.

China Fund Management, HFT, China Universal, Fullgoal List 4 ETFs in China

During the month, China Fund Management, HFT Asset Management, China Universal and Fullgoal Asset Management listed four ETFs on the Shanghai Stock Exchange. They track the CSI Beijing’s 50 Index, the SSE 10-Year Local Government Bond Index, the CSI Banks Index and the CSI GuoSen Value Index, respectively.

This listing puts the total number of ETFs listed in China at 184 (54 ETFs on the SZSE, 130 ETFs on the SSE).

Hanwha, Mirae, KB List 10 ETFs in Korea

On 8 November, Hanwha Asset Management listed 5 ETFs on the Korea Exchange. These ETFs track the KRX300 Health Care Index, KRX300 Industrials Index, the KRX300 Financials Index, the KRX300 Consumer Discretionary Index, and the KRX300 Information Technology Index, respectively.

On 8 November, Mirae Asset listed 2 ETFs. These ETFs track the FnGuide Holdings Company Index and the FnGuide Healthcare Equipment Index, respectively.

On 20 November, Mirae Asset listed 2 ETFs. These ETFs track the MSCI Korea TR Index and the KOSPI 200 TR Index, respectively.

On 28 November, KB Asset Management listed an ETF tracking the MSCI China NTR Index(USD) (Net Total Return).

These listings put the total number of ETFs listed in Korea at 415.

Fuh Hwa and Cathay Lists 4 ETFs in Taiwan

On 14 November, Fuh Hwa Securities Investment Trust listed 3 bond ETFs on the Taipei Exchange. These ETFs track the Bloomberg Barclays US Corporate 15+ Year Energy Index, the Bloomberg Barclays US Corporate 15+ Year Pharmaceuticals Index and the Bloomberg Barclays EM USD Credit Select Index, respectively.

On 30 November, Cathay Securities Investment Trust listed an ETF on the Taipei Exchange, tracking the Bloomberg Barclays US Corp A- and Above 10+ Years Liquid Index.

These listings put the total number of ETFs listed in Taiwan at 146.

Ping An lists 2 Strategic Beta ETFs in Hong Kong

On 30 November, Ping An of China Asset Management listed two strategic beta ETFs in Hong Kong. They track the MSCI China Diversified Multiple-Factor Index and the MSCI China Quality Index, respectively.

These listings put the total number of ETFs listed in Hong Kong at 191 (126 ETFs, 65 multiple counters, including 22 L&I Products).

ETFs Launched in November 2018 in the Asia ex-Japan Region

181206 New listings Nov 2018(EN)

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About Author

Jackie Choy, CFA  is the Director of Passive Investment Ratings, Global Manager Research.

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