The three ETFs, CSOP MSCI China A 50 Connect ETF, ChinaAMC MSCI China A 50 Connect ETF and E Fund (HK) MSCI China A 50 Connect ETF have listed this week, and are available in Hong Kong dollars, US dollars and renminbi.
“These new ETFs tracking the MSCI China A 50 Connect Index will join the increasingly diversified connect product ecosystem in Hong Kong … and providing another investment option for those seeking exposure to China assets,” HKEX co-head of markets Wilfred Yiu said in a statement.
Adopting a combination of physical representative sampling and synthetic representative sampling strategy, the CSOP ETF provides investment results that closely correspond to the performance of the MSCI China A 50 Connect Index, CSOP said in a statement.
The CSOP ETF will enable global investors to capture the investment opportunities of A-shares market in a more diversified and balanced way. The listing price is at around HKD7.8 ($1) per unit with trading lot of 100 units and management fee of 0.99% per annum. Upon inception, the ETF has received around $120m initial investment.
The MSCI China A 50 Connect Index is designed to have a comprehensive representation of the Chinese economy by including 50 of the largest stocks in the China A-share large-cap universe, and targeting at least two stocks from each sector. The index comprises 50 Stock Connect eligible underlying stocks and historically has a high correlation to the performance of main MSCI A-share indices.
“The MSCI China A 50 Connect Index follows an innovative sector-balanced approach that aims to ensure diversified and balanced representation of the broader China A market. It is designed to enable international and domestic investors to track China’s sector leaders and get exposure to the overall market, including the potential opportunities in China’s new economy,” Doug Walls, Apac head of index products at MSCI, said in a statement.
Since its launch in 2014, stock connect, the mutual market access programme linking the Hong Kong and mainland China equity markets, has become the key channel for international investors to access the A-shares market and has helped facilitate the inclusion of Chinese A-shares into key global indices. Nowadays, over 70% of international holdings of A-shares are through the stock connect, according to HKEX.
In October, HKEX launched its first A-shares index futures – MSCI China A 50 Connect Index Futures – which provides an efficient risk management tool for investors to manage their stock connect A-shares equity exposure in Hong Kong. The notional open interest of MSCI China A 50 Connect Index Futures exceeded $2bn in the first month of launch, with daily average trading volume of 11,927 contract in November, HKEX said.
Hong Kong’s ETF market continues to go grow. The average daily turnover of ETFs for the first 11 months of 2021 was HKD7.8bn, an increase of 20% compared with HKD6.5bn for the same period last year. The ETF market is also seeing growing and broader exposure to China’s economy, with assets under management of China-focused ETFs accounting for 25% of the Hong Kong ETF market as of end-November.