More Foreigners to Invest in China ETFs as Index System Fills Out, Product Choice Grows, Insiders Say(Yicai) Oct. 11 -- Foreign investors will increasingly take to Chinese exchange-traded funds as the country’s index system becomes more complete and the range of products grows, in the opinion of industry insiders.
The number and size of China ETFs, which usually track a specific index, have hit record highs this year, reaching 849 and more than CNY2 trillion (USD274.1 billion), according to the latest figures.
The investment vehicles are gaining popularity as they offer a flexible and cost-effective way for investors to have exposure to various asset classes, including stocks, bonds, commodities, and more.
Overseas investors in China tend to prefer broad-based index ETFs. Twelve of the 13 qualified foreign institutional investors among the top 10 holders of more than 100 equity ETFs were invested in broad-based funds, according to a first-half report on public funds. Top targets include the SSE Science and Technology Innovation Board 50 Index, the CSI 300 Index, and the SSE Constituent Index.
Domestic and overseas ETFs based on the CSI 300, which tracks the top 300 stocks traded on the Shanghai and Shenzhen bourses, exceeded CNY360 billion (USD49.3 billion), surpassing the size of all actively managed equity funds in China, per the report. One product alone topped CNY110 billion.
The market attracts major Asian asset managers. Singaporean sovereign wealth fund GIC, Nikko Asset Management, and Mitsubishi UFJ Kokusai Asset Management made the list of the top 10 holders of the China Capital Management Star 50 ETF, the HuaAn Funds SSE Constituent Index ETF, and the E Fund Management CSI300 Index ETF.
More specifically, GIC held 1.3 percent of the China Capital Management Star 50 ETF, up by 0.8 percentage point from the time of its 2022 report. Moreover, GIC was one of the top 10 holders of the Huatai-PineBridge Investments CSI300 Index ETF for the first time, with 0.9 percent.
The transaction volume of ETFs under the Shanghai-Hong Kong and the Shenzhen-Hong Kong Stock Connects totaled CNY14.2 billion (USD1.9 billion) in August, a 47 percent jump from July. That of the Shanghai-Hong Kong Stock Connect exceeded CNY10 billion, a record high.
Editors: Shi Yi, Emmi Laine
