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Samsung AM to debut HK’s first Reits ETF

The firm believes there is a product gap in the market. Separately, a China-focused ESG ETF is also expected to be rolled out by Haitong International AM.

Samsung Asset Management has received approval from the Securities and Futures Commission (SFC) last week to launch the Samsung S&P High Dividend APAC ex NZ Reits ETF in the SAR, according to the regulator’s website.

The product is expected to be listed on the Hong Kong Stock Exchange this Thursday and will be the first pure real estate investment trust (Reit) ETF in the territory, according to Alex Yang, Hong Kong-based vice president for institutional solutions at Samsung AM.

In Hong Kong, there are other ETFs that invest in the real estate sector, but are not pure Reits products, such as the BMO MSCI Asia Pacific Real Estate ETF, according to date from HKEX.

“We worked closely with S&P Dow Jones Indices to design this index, which comprises 30 Reits listed in developed markets across Asia-Pacific (excluding New Zealand) with the highest trailing 12-month dividend yield,” Yang told FSA.

“It focuses on the high dividend segment of APAC’s Reits market and focuses only on developed markets, including Australia, Japan, Hong Kong and Singapore. This is because historically, properties in these developed markets generally tend to be more well-managed and therefore generate more stable and predictable income.”

Source: Samsung Asset Management

Product gap

Yang also noted that there is a product gap in the market, where investors in Hong Kong and across Asia are looking for solutions that provide stable and relatively attractive income streams in a low yield environment.

“Currently the Hong Kong ETF market remains concentrated on a few Hong Kong and A-share broad-based ETFs and inverse and leverage products while other product choice remains limited,” he said.

He also added that dividend stocks that traditionally paid stable dividends, such as HSBC and Standard Chartered, have suspended dividend payouts since April.

“Now it is good timing to consider Reits. The asset class remains a competitive dividend-generating vehicle as they are required to pay out 90% of taxable rental income in most jurisdictions,” Yang said.

The firm has two other ETFs, which are the Samsung S&P GSCI Crude Oil ER Futures ETF and the Samsung CSI China Dragon Internet ETF. The firm also manages four leveraged and inverse products, all tracking Hang Seng-related indices, according to SFC records.

Haitong International Asset Management

Separately, Haitong International Asset Management in Hong Kong received SFC approval last week to launch the Haitong MSCI China A ESG ETF, according to the regulator’s records.

The product will invest directly in China A-Shares and it is expected to be listed on the HKEX this Thursday but may be postponed to a date no later than 23 October 2020, the product’s prospectus noted.

FSA sought more information from Haitong International AM, but it did not provide any details.

In Hong Kong, Haitong International AM manages one ETF, which is the Haitong CSI300 Index ETF. It also offers nine actively-managed mutual funds in the Hong Kong, SFC records show.

Part of the Mark Allen Group.