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Asia ETF Roundup (Industry) – July 2017

iShares FTSE A50 China Index ETF removes the “synthetic” label; MSCI and S&P Dow Jones Indices announce consultation on changes to Telecommunication Services Sector in GICS in 2018; Samsung delists 4 L&I Products in Hong Kong.

Jackie Choy 03/08/17

For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – July 2017”.

ETF Industry News

iShares FTSE A50 China Index ETF Removes the “Synthetic” Label and Adds RMB Counter
BlackRock announced that the iShares FTSE A50 China Index ETF’s (02823) use of physical replication, through direct holding of A-Shares and physical A-Share ETFs, has reached over 70% of its net asset value. As a result, effective from 7 July 2017, the “synthetic” label will be removed from its name. At the same time, the firm announced it had added an RMB (82823) counter of the fund.

MSCI and S&P Dow Jones Indices Announce Consultation on Changes to Telecommunication Services Sector in GICS in 2018
MSCI and S&P Dow Jones Indices announced a consultation in relation to their proposal to a number of changes to the Telecommunication Services Sector. The proposal set out the creation of a Communication Services Sector, comprised of the current Telecommunication Services Sector, Media Industry Group, and specific companies from the Software & Services Industry Group, summarised as follows:

  • Renaming the Telecommunication Services Sector to Communication Services Sector
  • Moving the Media Industry Group from under the Consumer Discretionary Sector into the Communication Services Sector and remaining it as the Media & Entertainment Industry Group, consisting of the “Media” and “Entertainment” Industries.
    • The Media Industry contains Advertising, Broadcasting, Cable & Satellite, and Publishing Sub-Industries
    • The Entertainment Industry contains “Movies & Entertainment” and “Interactive Home Entertainment” Sub-Industries. The latter generally contains companies from the current Home Entertainment Software Sub-Industry and some companies from the current Application Software Sub-Industry under the Information Technology Sector
  • Adding the Consumer Internet & Digital Services Industry Group, with one Industry and Sub-Industry, namely “Consumer Internet & Digital Services”, which includes certain companies pulled from the Information Technology Sector, mainly from the Internet Software & Services and Application Software Sub-Industries.

 

MSCI and S&P Dow Jones Indices mentioned that the impetus of the proposal was the changing landscape within the Telecommunication Services Sector and the Internet Software & Services Sub-Industry. Specifically, both have become too large and diverse to be useful for analysis or index construction.

The consultation will end on 29 September 2017. Any changes to the GICS structure are expected to be announced by November 2017. The consultation paper can be found on the MSCI or S&P Dow Jones Indices websites. 

RQFII ETF Watch – Net Outflows in July Totaled Rmb 0.7 billion

  • RQFII ETFs recorded estimated net outflows of Rmb 0.7 billion in July 2017 (2% of beginning and ending AUM). This compares to net inflows of Rmb 2.6 billion in June. This puts estimated net inflows for the first seven months of 2017 from RQFII ETFs in Hong Kong at Rmb 0.9 billion.
  • The net outflows came mainly from the ChinaAMC CSI 300 Index ETF (83188 & 03188), estimated at Rmb 0.9 billion.
  • The largest A-Share ETF by AUM in Hong Kong, iShares FTSE A50 China Index ETF (02823), recorded estimated net outflows of Rmb 2.0 billion in July. This compares to an estimated net outflow of Rmb 0.4 billion in June. For the seven months of 2017, we estimate total net outflows from the iShares FTSE A50 China Index ETF were Rmb 5.4 billion.

New Launches and Listings

Samsung Delists 4L&IProducts in Hong Kong
Samsung Asset Management (Hong Kong) announced it would delist 4 of its leveraged and inversed ETFs on the Hong Kong Stock Exchange:

  • Samsung KOSPI 200 Daily (2x) Leveraged Product (7250)
  • Samsung KOSPI 200 Daily (-1x) Inverse Product (7326)
  • Samsung TOPIX Daily (2x) Leveraged Product (7255)
  • Samsung TOPIX Daily (-1x) Inverse Product (7311)

 

In the announcement, the firm stated it had taken into account “relevant factors, including, in particular, the relatively small net asset value of each of the terminating products”. The last trading day for these 4 ETFs was 31 July 2017. Assets under management of these products ranged from HK$16 to 34 million (or US$2.1 to $4.3 million) as of 27 June 2017.

KB, Kyobo AXA, Korea Investment and Samsung List 7 Strategic-Beta ETFs in Korea
On 7 July 2017, KB Asset Management listed an ETF on the Korea Exchange tracking the FnGuide KQ High Dividend Focus Index.

On 11 July 2017, Kyobo AXA Investment Managers listed a strategic-beta ETF on the Korea Exchange (KRX) tracking the KRX Smart Value Index.

On 11 July 2017, Korea Investment listed two strategic-beta ETFs on the KRX tracking the FnGuide Smart Value Index and the FnGuide Smart Momentum Index, respectively.

On 11 July 2017 Samsung Asset Management listed three strategic-beta ETFs on the KRX tracking the MSCI Korea IMI Quality Capped, the MSCI Korea IMI Enhanced Value Capped and the MSCI Korea IMI Momentum Capped Indices, respectively.

The listing of these 7 strategic-beta ETFs put the total number of ETF listings in Korea at 291.

Harvest Fund Lists an ETF in China
On 10 July 2017, Harvest Funds listed an ETF on the Shenzhen Stock Exchange tracking the CNI Z A-share Composite Index. The index is composed of A-Share companies registered in the Zhongguancun area, a technology hub in Beijing.

GF Fund Lists an ETF in China
On 14 July 2017, GF Fund listed an ETF on the Shenzhen Stock Exchange tracking the CSI All Shares Industrials Index.

China Southern Lists an ETF in China
On 26 July 2017, China Southern Asset Management listed an ETF on the Shanghai Stock Exchange tracking the CSI Bank Index.

E Fund Lists an ETF in China
On 28 July 2017, E Fund Management listed an ETF on the Shanghai Stock Exchange tracking the CSI Military Industry Index.

The listings by Harvest, GF Fund, China Southern and E Fund puts the total number of ETFs in China at 158.

Fubon Lists an ETF in Taiwan
On 28 July 2017, Fubon Securities Investment Trust listed an ETF on the Taiwan Stock Exchange tracking the Hang Seng China Enterprises Index.

This listing puts the total number of ETFs in Taiwan at 81, of which 41 are leveraged/inverse ETFs.

List of ETFs Launched in July 2017

 

About Author Jackie Choy

Jackie Choy  

is the director of ETF Research for Morningstar Investment Management Asia