Asia ETF Roundup (Industry) – April 2021

Vanguard shutting its Hong Kong ETFs; BOJ may consider unloading ETFs when inflation approaches its 2% target.

Jackie Choy, CFA 06 May, 2021 | 10:57
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – April 2021”.

ETF Industry News

Vanguard Shutters its Hong Kong ETF Series

On 31 March 2021, Vanguard announced that it will shutter its six HK-domiciled ETFs. The funds last trading day will be 10 May 2021. The ETFs are Vanguard FTSE Asia ex Japan Index ETF (02805/82805/09805), Vanguard FTSE Developed Europe Index ETF (03101/83101/09101), Vanguard FTSE Japan Index ETF (03126/83126/09126), Vanguard FTSE Asia ex Japan High Dividend Yield Index ETF (03085/83085/09085), Vanguard S&P 500 Index ETF (03140/83140/09140) and Vanguard Total China Index ETF (83169/03169/09169). The full announcement can be viewed here.

BOJ May Consider Unloading ETFs When Inflation Approaches 2% Target

According to Reuters, Bank of Japan Governor Haruhiko Kuroda stated that it was still early to discuss an exit strategy for BOJ’s ETF purchase programme. According to the report, he also informed the parliament that when inflation approaches its 2% target, BOJ would establish an exit strategy for unloading its ETF holdings. The BOJ will aim to avoid losses and will consider market stability in unwinding its ETF holdings.

Updates on the U.S. Executive Order – MSCI Potential Deletion of 4 Securities

MSCI will remove 4 additional securities from its equity indexes on 20 May 2021, barring further guidance from the Office of Foreign Assets Control (OFAC) by 17 May 2021. These securities have names that closely match the companies covered by the November 2020 Executive Order but have not been included in OFAC’s Non-SDN List. As of 23 April 2021, the affected securities represented a combined 0.005% of the MSCI ACWI IMI and 0.038% of the MSCI EM IMI. They are:

  • CGN Power Co Ltd (01816)
  • China National Chemical Engineering Co Ltd (601117)
  • China Shipbuilding Industry Co Ltd (601989)
  • Inspur International Ltd (00596)

 

According to MSCI, the list was identified in accordance with the Securities Industry and Financial Markets Association (SIFMA) rules to identify subsidiaries with names that closely match the entities listed in the Executive Order. MSCI will issue a confirmation announcement on 17 May 2021. The announcement can be found here.

Chinese Equity ETF Watch – Hong Kong-Domiciled ETFs See Small Net Flows; US-Domiciled ETFs See Estimated Net Inflows of USD 1.5 billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw small net outflows in April, estimated at USD 139 million. The outflows came mainly from the Hang Seng China Enterprises Index ETF (02828/82828).
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw small estimated net inflows of USD 32 million in April.
  • Hong Kong-domiciled ETFs in the China Equity Category and the China Equity – A-Shares Category have seen estimated year-to-date outflows of USD 0.3 billion each.
  • In the U.S. in April, Chinese equity ETFs saw net inflows of around USD 1.5 billion. Net inflows to iShares China Large-Cap ETF (FXI) and iShares MSCI China ETF (MCHI) totaled an estimated USD 0.8 billion. The KraneShares CSI China Internet ETF (KWEB) also saw estimated  net inflows of USD 0.8 billion.

flows

New Launches and Listings

China: 12 New ETF Listings

  • Chinese ETF providers listed 12 new ETFs on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. These include 11 thematic, ESG, and/or sector ETFs and an ETF tracking the Nikkei 225 Index.
  • Including the above listings, the total number of ETFs in China stands at 450 (144 ETFs on the SZSE, 306 ETFs on the SSE).

 

Hong Kong: 2 ETF New Listings

  • Premia Partners listed 2 bond ETFs on the Hong Kong Exchange.
  • These listings put the total number of ETFs listed in Hong Kong at 237 (148 ETFs and 89 multiple counters, including 24 leveraged/inverse products).

 

South Korea: 9 ETF New Listings

  • Korean ETF providers listed 9 ETFs on the Korea Exchange. These include 5 thematic ETFs and 4 broad market ETFs.
  • These listings put the total number of ETFs listed in South Korea at 476.

 

Taiwan: 1 ETF New Listing

  • Fubon Asset Management listed an ETF on the Taiwan Stock Exchange, tracking the FTSE Vietnam 30 Index.
  • These listings put the total number of ETFs listed in Taiwan at 220, of which 97 are bond ETFs.

 

ETFs Launched in April 2021 in the Asia ex-Japan Region  

Listings

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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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