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Premia Partners joins Hong Kong’s ETF market

The firm received a green light from the Securities and Futures Commission to launch two China-focused ETFs, according to the latest records from the regulator.
Star Ferry in Hong Kong

The Premia CSI Caixin China Bedrock Economy ETF and the Premia CSI Caixin China New Economy ETF were approved on 16 October.

According to the firm’s website, the two ETFs will be listed on 24 October.

The products will be the first in Hong Kong to track the CSI China Bedrock Economy Index and the CSI Caixin New Economic Engine Index.

The Bedrock Economy Index is comprised of 300 China A-shares based on a methodology that includes a company’s size, financial health and low risk score, according to the index’s factsheet.

The New Economic Engine Index selects 300 China A-shares from new economy industries according to financial health and a non-fixed assets score, according to its factsheet.

The products will be the first smart beta ETFs tracking the China A-shares market, David Lai, the firm’s partner and co-chief investment officer, told FSA.

Premia Partners first received licences for asset management, dealing in and advising on securities in March this year, according to SFC records.

The managing partner of the firm is Rebecca Chua, who was previously ICBC Credit Suisse Asset Management’s deputy CEO, according to the firm’s website.

Lai was previously an executive director and responsible officer at China Asset Management in Hong Kong.

Partner and co-CIO Laura Lui previously led the index and quantitative team at ICBC Credit Suisse International, and partner and chief distributor officer Aleksey Mironenko held various leadership roles at Blackrock’s iShares, including head of Asia-Pacific fixed income and head of Asia ex-Japan institutional sales.

ETF woes

The funds’ launch comes at a time when ETFs listed in Hong Kong are perceived to be unattractive to investors because they do not have the advantages of liquidity and low cost, according to King Au, CEO at Value Partners.

“The advantages of ETF trading should be high liquidity yet at a low cost. But in Hong Kong, both qualities are absent,” he said during the ALFI Hong Kong Investment Funds Seminar last week.

In addition, Hong Kong this year has had 27 ETFs delisted. The latest termination of products were announced by China Asset Management and Mirae Asset Global Investments. Last year, 26 ETFs were delisted.

Lai is not concerned about the delistings, he said, adding that delistings are also common in the US.

He explained that in the case of Hong Kong, either firms are changing their strategic angle of their businesses or their ETFs are not just gaining sufficient demand to gain enough assets.

Hong Kong is the second largest ETF market after Japan in the Asia-Pacific region, with  $36.4bn in assets as of the end of 2016, according to data from ETFGI.

Part of the Mark Allen Group.