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Affin Hwang and Samsung AM tie up for L&I products

Affin Hwang and Kenanga Investors are set to take advantage of the new rules that will allow L&I products in Malaysia next year.

Kuala Lumpur-based Affin Hwang Asset Management has entered into a strategic partnership with Samsung Asset Management in Hong Kong to co-develop ETF products in Malaysia, according to a statement from the Malaysian firm.

The partnership includes the development and offering of L&I ETFs to Malaysia’s domestic investors. Under the partnership agreement, Affin Hwang AM will appoint Samsung AM as its investment advisor to provide advisory services in the management of its derivative type ETFs.

“Given Samsung’s strong capabilities and success in managing L&I products, we believe that we are able to capitalise on their expertise to complement our growth strategy,” Teng Chee Wai, Affin Hwang AM’s managing director, said in the statement.

The Korean firm has been one of the first Asia-based managers to launch L&I products. It has been managing L&I ETFs in Korea since 2009 and was also the first to roll out such products in Hong Kong in 2016.

Affin Hwang AM manages one ETF, the Tradeplus Shariah Gold Tracker, which was launched in December and is also Malaysia’s only commodity ETF.

The country’s ETF market remains small, with just nine ETFs managed by four asset managers, according to data from Bursa Malaysia.

New regulations

The partnership comes at a time when Malaysia is setting the stage to include other types of ETFs in the market.

This week, the Securities Commission Malaysia (SC) revised its guidelines on ETFs to allow the issuance of L&I products, synthetic ETFs, physical commodity ETFs and smart beta ETFs, according to a statement from the regulator.

The new guidelines will take effect on 2 January.

The regulator noted that given the complexity of L&I ETFs, prospective retail investors must meet certain pre-qualification criteria before they can invest in these products. First time retail investors must also undergo an e-learning module developed by the local bourse as well as a performance simulator provided by management companies of L&I ETFs before they can invest in such products.

The regulator has been planning to allow L&I products in 2017 and published a consultation paper in July last year to further develop its ETF market.

Other firms are also taking advantage of the new regulation.

In June, Kenanga Investors entered into a strategic partnership with Taipei-based Yuanta Securities Investment Trust to develop ETFs in Malaysia, which include L&I ETFs.

Yuanta Securities has also previously established partnerships with other asset management firms in the region, which include its tie-up with E Fund Management in Hong Kong to launch a leveraged ETF tracking the Hang Seng Index in August last year.

Part of the Mark Allen Group.