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CSOP AM delists China-focused ETF

CSOP Asset Management is delisting a China-focused ETF from the Stock Exchange of Hong Kong, citing unsatisfactory assets.
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The last trading day of the CSOP CES China A80 ETF is on 18 December, according to a HKEX filing.

In an announcement made by the firm on its website, CSOP AM said that it decided to terminate the ETF after taking into account various factors, particularly the relatively small assets the product has.

The ETF, which was first listed in September 2013, has assets of around RMB 6.5m ($980,000), according to the firm’s website.

The ETF is a physical A-share product that utilises the firm’s renminbi qualified foreign institutional investor (RQFII) quota and tracks the price return of the CES China A80 Index.

Rival firm China Asset Management also had an ETF tracking the same index, but decided to terminate it in October also because it had gathered insubstantial assets. The ETF saw its assets plunge to just RMB 3.56m in June from RMB 24.55m in December 2015.

CSOP manages seven other ETFs, which includes five China-focused products with total assets of RMB 24.24bn. Among the five, the CSOP FTSE China A50ETF had the largest amount of assets (RMB 22.87bn), according to the firm’s website.

The firm determined that its A80 ETF was not able to attract substantial assets because its performance is not differentiated from the A50 ETF, Melody He, the firm’s head of ETF and index solutions, told FSA.

“A80 was listed after the A50 ETF. We have received feedback that though A80 is more broad-based than A50, the correlation between the A50 and A80 is very high,” she said, adding that the A50 ETF’s liquidity is the better of the two.

“We feel that the A80 ETF will not have long-term demand.”

CSOP’s A50 ETF has grown into one of the largest and most liquid ETFs in Hong Kong, Ho believes.

A number of firms have delisted their ETFs in Hong Kong this year. They include two products managed by Mirae Asset Global Asset Management, six from Samsung Asset Management, and 16 managed by Deutsche Asset Management. So far, Hong Kong this year has had nearly 30 ETF delistings.

Last year, 26 ETFs were delisted in Hong Kong, according to HKEX.

Hong Kong’s ETF market is unattractive to investors because they do not have the advantages of liquidity and low cost, King Au, Value Partners’ CEO, said previously.

“The advantages of ETF trading should be high liquidity yet at a low cost. But in Hong Kong, both qualities are absent.”

Part of the Mark Allen Group.