New Products & Ideas
First Chinese cross-border ETFs to roll out in July
China’s market watchdog, the China Securities Regulatory Commission (CSRC), is expected to approve the first batch of Mainland cross-border exchange traded funds (ETFs) by July this year, according to Shanghai Securities News.
According to the CSRC website, E Fund and China AMC are the only fund managers to have submitted applications to launch cross-border ETFs. On approval, China AMC intends to list its ETF on the Shenzhen Stock Exchange; E Fund’s is to be listed on the Shanghai bourse.
The cross-border ETF initiative was unveiled by Vice Premier Li Keqiang in mid-August last year as part of a plan to boost Hong Kong’s credentials as a global financial hub. Through the scheme, Mainland investors are able to invest in Hong Kong stocks.
BlackRock announces new head of APAC iShares
BlackRock Inc has appointed Jane Leung as head of iShares Asia-Pacific. She is responsible for driving the regional growth strategy and business operations of iShares and will become a member of the firm’s executive committee in Asia-Pacific and the global iShares executive committee. Ms. Leung will report to Mark McCombe, BlackRock’s chairman, Asia-Pacific, and Mark Wiedman, global head of iShares.
Ms. Leung succeeds Nick Good who was appointed as BlackRock’s head of strategy and business development, Asia-Pacific in February.
Mr. McCombe said: “Investors in Asia are seeking out dynamic and diverse ways of investing that use both active and index investment strategies to boost returns. We expect assets under management and trading volumes in ETFs to grow significantly in Asia-Pacific as a result. Jane’s appointment reflects the importance we place on delivering the products and expertise our clients need.”
Ms. Leung has more than ten years’ experience with BlackRock. She currently serves as the head of BlackRock’s Asia-Pacific index equity team, responsible for the team’s portfolio management activities. Before taking on her current role, she was the senior director of product for iShares Asia ex-Japan.
Ms. Leung said: “I am delighted to be taking up this role. I look forward to leveraging my experience in index portfolio management and iShares product development to ensure our global ETF leadership position is reflected in Asia-Pacific.”
S&P Indices licenses S&P 500 to Bosera
S&P Indices has announced that it has licensed its world-renowned index, the S&P 500, to Bosera Asset Management Co Ltd for the development of an index fund.
Widely considered the premier gauge of US equity market performance since it was first introduced in 1957, the S&P 500 has over US$5.58 trillion benchmarked to it globally, and approximately $1.3 trillion indexed to it via index funds and exchange traded products. The S&P 500 includes 500 leading companies from major industries across the US economy, capturing approximately 75% coverage of US equities.
“The announcement is another milestone in the development of the domestic financial market in China,” said Alexander Matturri, executive managing director at S&P Indices. “S&P Indices is excited to play a major role in the continuing development and robust growth of China’s investment landscape. Our licensing agreement with Bosera Asset Management means that Chinese investors will now be able to directly track the returns of the large cap US equities market and gain an important index solution and diversification tool for their portfolios.”
“We’re excited to work with S&P Indices to bring the world’s most followed stock market index to Chinese investors,” said H. E. Bao, president of Bosera Asset Management Co Ltd. “This initiative has been driven by domestic demand for a greater and more diversified range of investment opportunities, including access to international markets. Our cooperation with S&P Indices brings this to fruition and also benefits the markets generally by enhancing investment and liquidity across borders.”
Second batch of RQFII quotas to be allocated to HK-listed A-share ETFs
The China Securities Regulatory Commission’s (CSRC’s) fund supervision department director Wang Lin has indicated that the second batch of RQFII quotas, 50 billion yuan (US$7.9 billion) in total, will be fully invested in Hong Kong-listed A-share ETFs, according to the Southern Metropolis Daily.
The ETFs will track the performance of A-share indexes such as CSI 300, CSI 100, FTSE China A50, and MSCI China Index. Instead of granting specific quotas to each institution, the new RQFII allocations will be distributed when the RQFII ETF products are approved by the Securities and Futures Commission (SFC), Mr. Wang added.
Four Mainland fund houses, ChinaAMC, Harvest, E Fund and China Southern, have reportedly submitted their applications to the SFC.
Separately, Mr. Wang stated that 37 existing QFII license holders, including the Hong Kong Monetary Authority and Fidelity, have applied for additional QFII quotas with a combined total of US$12.5 billion. Thirty-three foreign institutions have applied for initial QFII quotas amounting to $10.25 billion.