BOCI-Prudential Asset Management, a joint venture between Bank of China and British insurer Prudential, today launched an ETF tracking companies in China’s “new economy”, which typically means avoiding 100% state-owned enterprises.
The Wise Nasdaq Overseas China New Economy Companies Top 50 Index Tracker started trading today on Hong Kong’s bourse. The cap-weighted index tracks 50 mega-cap offshore-listed Chinese companies.The ETF currently holds 31 Hong Kong-listed stocks and the remaining are listed in the US.
The holdings are categorised in four sectors: consumer goods, consumer services, healthcare and technology. Each stock takes up a maximum of 8% in index weighting.
However, on Hong Kong’s exchange, there are several listed passive funds that provide similar exposure, such as the ICBC CSOP S&P New China Sectors ETF, the Internet-focused Samsung CSI China Dragon Internet ETF and the CICC KraneShares CSI China Internet Index ETF.
Chris Tse, head of Asia-Pacific at Nasdaq Indexes Global Information Services, said at a media briefing in Hong Kong that the he believes the Nasdaq index can provide a “non-ambiguous definition” to BOCI’s new economy product.
“We select the four sectors based on the consensus among several stock exchanges on the definition of new economy,” he continued. He said he doubts other products that include traditional cyclical sectors, such financial, industrials and utilities, would reflect the new economy.
Last year, there was a total of 35 delisting cases of exchange-traded products, which mainly are China-focused funds. Two thematic exchange-traded products investing in consumption and real estate sectors managed by BOCI-Prudential AM were among the delisted funds.
BOCI-Prudential ETF top 5 holdings
|
Alibaba |
8% |
| Baidu |
7.9% |
|
Tencent |
7.5% |
| JD.com |
5.8% |
|
Netease |
4.5% |
Source: fund document
Manulife and the Bay Area
Separately, Manulife AM rolled out the Greater Bay Area Growth & Income Segregated Portfolio in Hong Kong.
The growth and income strategy invests in science and technology, finance or real estate, consumption upgrade and infrastructure sectors across the Guangdong-Hong Kong-Macau Greater Bay Area. The area comprises Hong Kong, Macau and nine mainland cities: Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Zhaoqing, Huizhou and Jiangmen.
The fund seeks the fast-growing opportunity among the companies registered in or with headquarters in the area.
“These companies will have more potential for earnings growth as they benefit directly from the Greater Bay Area’s policies, regulatory changes and tax incentives,” Ronald Chan, chief investment officer for Asia (ex-Japan) equities wrote in a client note.
With roughly 1% of China’s total land mass, the area accounts for about 12% of China’s GDP, according to Manulife AM.
Chan believes the GBA is expected to rival established bay areas around the world in the upcoming years.
The firm opened subscription to Standard Chartered clients in Hong Kong only.
Manulife’s top 5 holdings
| US Treasury 2.75% (Maturity: 5/31/2023) | 4.30% |
| Chalco HK Investment (Maturity: 4/29/2166) | 2.87% |
| US Treasury 2.625% (Maturity: 6/30/2023) | 2.79% |
| Tencent | 2.49% |
| Ping An Insurance Group | 2.35% |
Source: fund factsheet, on 7 July.
Sector allocation
| Equities | Fixed income | Total | |
| Financials | 12.32% | 7.04% | 19.36% |
| Real estate | 12.93% | 2.66% | 15.59% |
| Consumer discretionary | 11.44% | 4.14% | 15.58% |
| IT | 11.47% | / | 11.47% |
| Industrials | 8.45% | 1.43% | 9.88% |
Source: fund factsheet
