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Another China ETF exits HK

GF International Investment Management has decided to delist its China-focused ETF in Hong Kong, according to records from the Hong Kong Exchange.

The GFI MSCI China A International ETF’s last trading day will be on 26 September, according to HKEX records.

GF International’s MSCI China A International ETF only has RMB 20.6m ($2.3m) in assets, according to the HKEX.

The ETF is the only SFC-authorised fund that the Hong Kong-based firm manages, according to the Securities and Futures Commission.

However, the firm offers a China-domiciled fund managed by its China-based parent, the GF Industry Leaders Mixed Asset Fund, via the Hong Kong-China Mutual Recognition of Funds scheme, according to SFC records.

GF International is the Hong Kong-based wholly-owned subsidiary of Guangzhou-based GF Fund Management. Excluding money-market fund assets, GF Fund is the twelfth largest fund manager in China with RMB 141.2bn ($12bn) in assets as of November, according to data from the Asset Management Association of China.

FSA sought more information from GF International, but the firm was not able to comment in time for publication.

ETF delistings

GF International’s move follows the trend of ETFs being delisted in Hong Kong, mostly because most have failed to gather satisfactory assets. Last year, 10 firms announced that they were delisting 35 ETFs, with most of them focused on China A-shares. The most recent firm to delist its China-focused ETF was E Fund Management.

One recurring argument about why most ETFs in Hong Kong haven’t reached critical mass is lack of diversified products.

Out of 111 Hong Kong-listed ETFs, those focused on Hong Kong and China account for 75% of the market as of July, according to HKEX data.

However, although Hong Kong investors are believed to have a home-market bias and prefer the Hong Kong and China markets, ETF assets are concentrated in just a few products. The five largest ETFs account for 70% of total ETF assets.

Part of the Mark Allen Group.