The SSIF DCE Iron Ore Futures Index ETF from Shanxi Securities International Asset Management received approval from the Securities and Futures Commission (SFC) last week, according to the regulator’s website.
The product will be the firm’s first for retail investors in Hong Kong and it will invest in China’s commodity futures market, specifically iron ore futures contracts, a spokesman for the firm told FSA.
“At the same time, the product is Hong Kong Stock Exchange’s first ETF which is linked to international products of mainland commodity futures without qualified foreign institutional investor (QFII) quota restrictions,” the spokesman added.
The US dollar-denominated product invests in iron ore futures contracts (DCE iron ore futures contracts) traded on the Dalian Commodity Exchange (DCE), according to the fund’s prospectus.
“The investment objective of the fund is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the DCE Iron Ore Futures Price Index,” the prospectus noted.
The product is going to be listed in Hong Kong on 27 March, according to the spokesman.
Hong Kong has 11 commodities funds – mainly focused on gold and oil. The cumulative three-year return for the category is -16%.
Year-to-date, Hong Kong’s commodities fund category has plunged 28.2%, more than the Hang Seng Index (-18.36%).
The Hong Kong asset management arm is a wholly-owned subsidiary of Shanxi Securities, a firm incorporated in mainland China and listed on the Shenzhen Stock Exchange, with three licenses granted by the SFC in 2015, including advising on securities (type 4), advising on futures contracts (type 5) and asset management (type 9), according to SFC records.
In Hong Kong, the firm owns four affiliates in total, the other three being Shanxi Securities International, Shanxi Securities International Futures and Shanxi Securities International Capital, SFC records show.
