For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – May 2017”.
Will MSCI Include A-Shares? Announcement Scheduled for 20 June (21 June Asia Time)
MSCI will release the results of its 2017 Annual Market Classification Review on 20 June (10:30pm Central European Summer Time, i.e. early morning on 21 June in Asia). This review includes the potential re-classification of the MSCI China A and MSCI Argentina Indexes to Emerging Markets and the MSCI Nigeria Index to Standalone Market status. Recall that in March this year, MSCI unveiled a new proposal for the inclusion of China A-Shares in its global equity benchmarks, which puts the Stock Connect programmes at the centre of its plan. Please refer to our article “MSCI Proposes New Roadmap for China A-Share Inclusion” for further details on the proposal.
Malaysia Regulator Released Measures to Drive ETF Growth
On 17 May 2017, a task force led by the Securities Commission Malaysia (SC) released a set of recommendations seeking to enhance the ecosystem and drive further growth of the ETF industry in Malaysia. The recommendations include facilitating issuances and investments, enabling product innovation and intensifying investor engagements. The specifics are as follows:
- To attract more issuers and encourage issuance of ETFs:
- Lowering of minimum capital requirement for ETF issuers from RM10 million to RM2 million
- Removal of the requirement for submissions to be made by principal advisors
- Shortening timeframe in the issuance process
- To broaden ETF distribution channels:
- Permitting financial institutions, online platforms and financial planners to offer ETFs to clients via stockbroking companies
- To encourage product innovation:
- Introduction of new types of ETFS, including futures-based and conventional commodity-based ETFs
- Allowing greater flexibility in terms of investment strategies including the introduction of leveraged and inverse ETFs
- To increase investor awareness and understanding of ETFs:
- Bursa Malaysia will intensify its nationwide roadshows and investor education programmes to attract participation, and to ensure that investors are knowledgeable and well-equipped in trading ETFs
- To recognise the important role of market makers in providing trading liquidity to ETFs:
- SC and Bursa Malaysia are providing rebates and waiving relevant fees applicable to ETF market makers, including a 100% clearing fee rebate
According to the press release, the initiatives and recommendations will be implemented by end-2017. As of 31 May 2017, there were 8 ETFs listed on the Bursa Malaysia.
RQFII ETF Watch – Net Inflows in May Totaled Rmb 1.2 billion
- RQFII ETFs recorded estimated net inflows of Rmb 1.2 billion in May 2017 (4% of beginning and ending AUM). This compares to net outflows of Rmb 0.5 billion in April. This puts YTD estimated net outflows from RQFII ETFs in Hong Kong at Rmb 1.0 billion.
- The net inflows came cheifly from the ChinaAMC CSI 300 Index ETF (83188 & 03188), which amassed an estimated Rmb 1.5 billion in net new assets. These inflows were partially offset by net outflows from the CSOP FTSE China A50 ETF (82822 & 02822), estimated at Rmb 0.3 billion.
- The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823), recorded estimated net outflows of Rmb 0.5 billion in May. This compares to virtually zero net flows in April. As of 31 May 2017, we estimate the YTD total net outflows from the iShares FTSE A50 China Index ETF were Rmb 3.0 billion.
New Launches and Listings
E Fund Lists an ETF in China
On 10 May 2017, E Fund Management listed an ETF on the Shenzhen Stock Exchange that tracks the SZSE Component Index.
Samsung and Mirae List Global Infrastructure ETFs in Korea
On 16 May 2017, Samsung Asset Management and Mirae Asset Management each listed an ETF on the Korea Exchange. Both ETFs track the S&P Global Infrastructure Index via synthetic replication.
Hanwha Lists 2 ETFs in Korea
On 16 May 2017, Hanwha Asset Management listed two ETFs on the Korea Exchange, namely the ARIRANG S&P500 ETF and ARIRANG S&P Global Infra ETF. The ETFs track the S&P 500 Index and the S&P Global Infrastructure Index, respectively.
The listings of ETFs by Samsung, Mirae and Hanwha Asset Management put the total number of ETF listings in Korea at 275.
Fubon Lists an ETF in Taiwan
On 17 May 2017, Fubon Securities Investment listed the Fubon TWSE Corporate Governance 100 ETF on the Taiwan Stock Exchange. The ETF tracks the TWSE CG 100 Index which is composed of 100 stocks on the Taiwan Stock Exchange scoring in the top 20% under the Corporate Governance Evaluation System developed by the TWSE, along with some liquidity and financial health screens.
This listing puts the total number of ETFs in Taiwan at 78, of which 39 are leveraged/inverse ETFs.
GF Lists an ETF in China
On 19 May 2017, GF Securities listed an ETF on the Shenzhen Stock Exchange that tracks the ChiNext Index.
The listings of ETFs by E Fund and GF put the total number of ETF listings in China at 154.
List of ETFs Launched in May 2017