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Nikko AM preps China bond ETF in Singapore

Singapore is now expecting two onshore China bond ETFs to be listed on the local bourse.

Nikko Asset Management has filed an application with the Monetary Authority of Singapore (MAS) to launch the NikkoAM-ICBCSG China Bond ETF last week, according to the regulator’s website.

The firm has also made an application to the Singapore Exchange (SGX) to list the product, the fund’s prospectus shows.

FSA sought more information from Nikko AM, but the firm declined to provide more information.

Currently, there is no China-focused bond ETFs listed in Singapore. With Nikko AM’s application, Singapore is now expecting two onshore China bond ETFs to be listed on the local bourse, the other being CSOP Asset Management’s ICBC CSOP FTSE Chinese Government Bond Index ETF, which was recently approved by the MAS but has not yet been listed on the exchange.

Out of the 35 listed ETFs in Singapore, seven are fixed income products investing in Singapore’s and the broader Asia bond market, according to data from the Singapore Exchange. On the equity front, there are only three ETFs that provide exposure to China equities, with only one investing in the country’s onshore markets.

The Nikko AM ETF will replicate the returns of the ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index, according to its prospectus. The ETF’s portfolio will include onshore renminbi Chinese treasury bonds and bonds issued by the three Chinese policy banks, which are the Agricultural Development Bank of China, the China Development Bank and the Export-Import Bank of China, which are wholly owned by the Chinese government, according to the prospectus.

Nikko AM will act as the manager of the ETF, while Industrial and Commercial Bank of China (ICBC) in Singapore is the investment advisor of the fund, the prospectus noted.

Nikko AM manages four other ETFs in the Lion City, including two fixed income products and two equity offerings.

Elsewhere, the firm just entered Hong Kong’s ETF market, where it listed its first ETF product in October last year. So far, the firm has launched two ETFs in the SAR, both of which are thematic, technology-focused products.

Part of the Mark Allen Group.