The two firms announced the listing on 9 April of the CICC KraneShares CSI China Internet Index ETF on the Hong Kong bourse. It is the only ETF product that two firms currently sell to Hong Kong retail and institutional investors. The fund has been listed on the NYSE since 2013.
Lin Ning, managing director of CICC Hong Kong Asset Management, who manages the product, said the Hong Kong listing will address client demand in Asia, where his firm found considerable interest in a passive product investing in China’s internet sector.
Its benchmark is the CSI Overseas China Internet Index. In the index, there are a total of 33 stock holdings, mainly listed on exchanges in the US and Hong Kong.
The fund’s top ten holdings, as of the end of 2017 include China’s flagship technology giants such as Tencent, Alibaba and Baidu. It also invests in other e-commerce platforms like JD.com and Vipshop.
In terms of market capitalisation, large-cap companies account for 53.2% of assets, mid-caps 34.4% and small-caps 12.4%.
US partner
In July 2017, CICC bought a 50.1% stake of Kraneshares, which primarily focuses on issuing China-focused ETFs.
Kraneshares has ten ETFs listed in the US. Five of them invest in China equities and one in Chinese fixed income. Another product tracks the MSCI One Belt One Road Index. It also offers two products investing in emerging market equities and one in electric vehicle-linked companies.
However, this is not the first time for Kraneshares to jointly launch a product with a Chinese asset manager.
In 2014, the firm partnered, separately, with E Fund and Bosera Asset Management to launch Kraneshares E Fund China Commercial Paper ETF and Kraneshares Bosera MSCI China A ETF. The Chinese managers also took a role as the co-advisors for the funds.
Hong Kong-listed CICC, set up in 1995, is the investment banking joint venture between China Construction Bank and Morgan Stanley. Its shareholders include the China sovereign wealth fund CIC and the Singapore sovereign wealth fund GIC. It manages the SFC-registered CICC RMB Fixed Income Fund, launched in 2012.
Performance of CICC RMB fixed income versus category average
