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Asia ETF Roundup (Industry) – May 2019

MSCI increases weight of China A shares and adds Saudi Arabia and Argentina in EM indices; HK’s onshore Chinese equity ETFs see net outflows of USD 1.4 billion

Jackie Choy, CFA 06/06/19

For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – May 2019”.

ETF Industry News

MSCI Increases Weight of China A-shares and Adds Saudi Arabia and Argentina in EM Indices

As a part of its May 2019 semi-annual index review MSCI announced the following constituent changes to its suite of Asian and Emerging Markets Indexes, which took effect after the market close as at 28 May 2019:

  • MSCI implemented the first step of weight increases for China A-shares in the MSCI Emerging Markets Indexes. China A shares will have a weight of 1.8% in the MSCI Emerging Markets Indexes.
  • MSCI China Index: 26 additions, including 18 ChiNext stocks, increasing China A-share inclusion factor to 10% from 5%.
  • MSCI China A Onshore Index: 109 additions and 3 deletions.
  • MSCI Hong Kong Index: 1 addition, Vitasoy, and 2 deletions, including Hang Lung Group.
  • MSCI Saudi Arabia Indexes added into the MSCI Emerging Markets Indexes, contributing an aggregate weight of 1.42% in the MSCI Emerging Markets Index. Current inclusion factor is set at 50%, with the remainder to be added at the August 2019 Index Review.
  • MSCI reclassified the MSCI Argentina Indexes as “Emerging Market”. Eight Argentinian stocks were added, which contributes a 0.26% weight in the MSCI Emerging Markets Index.

The increase in the weight of China A-shares in the MSCI Emerging Markets Indexes will be implemented in three stages. The inclusion factor will further increase to 15% during the quarterly review in August 2019 and then increase to 20% together with the inclusion of China A mid-cap shares in the semi-annual review November 2019. The detailed statement of the May 2019 index review can be found here.

 

HKEx Partners with Euroclear Bank to Adopt International Central Securities Depository for ETF Settlement

The Stock Exchange of Hong Kong announced a collaboration with the Euroclear Bank to adopt the international central securities depository (ICSD) ETF settlement model. With the adoption of the ICSD settlement model, cross-listed ETFs should be able to enjoy a more efficient settlement infrastructure by allowing trades to be settled in one central location rather than in various depositories in different markets, hence reducing frictional costs.

 

Chinese Equity ETF Watch – HK-Domiciled Offshore Chinese Equity ETFs See Net Outflows of USD 278 million while Onshore Chinese Equity ETFs See Net Outflows of USD 1.4 billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated outflows of USD 278 million in May, coming mainly from the Hang Seng China Enterprises ETF (02828). Meanwhile, ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 1.4 billion in May, coming mainly from the iShares FTSE A50 China ETF (82823) and the CSOP FTSE China A50 ETF (82822).
  • For the first five months of 2019, Hong Kong-domiciled ETFs in the China Equity Category saw estimated outflows of USD 0.8 billion, while ETFs in the China Equity – A-Shares Category saw estimated outflows of USD 1.7 billion.
  • In the U.S. in May, we saw an estimated USD 710 million of net outflows from the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) and estimated USD 641 million of net outflows into the Xtrackers Harvest CSI 300 China A ETF (ASHR).

 

New Launches and Listings

CSOP Lists the First 2x Inverse Product in Hong Kong

On 29 May, CSOP Asset Management listed Hong Kong’s first two times inverse product. The product tracks the two times inverse daily performance of the Hang Seng Index.

This puts the total number of ETF listings in Hong Kong at 201 (131 ETFs, 70 multiple counters, including 23 L&I Products).

 

Cathay Securities, First Securities, Yuanta and Sinopac Listed 9 ETFs in Taiwan

On 3 May, Cathay Securities listed three ETFs, of which two listed on the Taipei Exchange (TPEX) and one listed on the Taiwan Stock Exchange (TWSE). The ETFs listed on TPEX track the Bloomberg Barclays 15+ Years Healthcare Select Index and the FTSE Chinese (USD) Broad Investment-Grade Bond 7+ Years ex-BBB Select Index, respectively, while the ETF listed on TWSE tracks the PHLX Semiconductor Index. 

On 9 May, First Securities listed three bond ETFs on the Taipei Exchange. These ETFs track the Bloomberg Barclays US Corporate 10+ Year Technology Index, the Bloomberg Barclays US Corporate 10+ Year Banking Index and the Bloomberg Barclays US Treasury 20+ Year Index, respectively.

On 16 May, Yuanta Securities listed an ETF on the Taiwan Stock Exchange. The ETF tracks the S&P US High Yield Preferred Stock Index. 

On 22 May, Sinopac Securities listed two bond ETFs on the Taipei Exchange. These ETFs track the ICE 10+ Year Core Large Cap Single-A US Corporate Index and the ICE 15+Year Core A-BBB US Insurance & Financial Services Index, respectively.

These listings put the total number of ETFs listed in Taiwan at 190, of which 73 of them are bond ETFs.

 

Penghua and Guotai listed 2 ETFs in China

On 6 May, Penghua Fund Management listed an equity ETF on the Shanghai Stock Exchange. The ETF tracks the CSI Alcoholic Drink Index.

On 20 May, Guotai Asset Management listed an ETF on the Shanghai Stock Exchange. The ETF tracks the CSI Biotechnology Thematic Index.

These listings put the total number of ETFs listed in China at 208 (59 ETFs on the SZSE, 149 ETFs on the SSE).

 

Samsung listed 2 ETFs in South Korea

On 31 May, Samsung Asset Management listed 2 ETFs on the Korea Exchange. These ETFs track the FnGuide Growth Index and the FnGuide SLV Dividend Value Index, respectively.

These listings put the total number of ETFs listed in South Korea at 429.

 

ETFs Launched in May 2019 in the Asia ex-Japan Region  

About Author Jackie Choy, CFA

Jackie Choy, CFA  

Jackie Choy, CFA is the Director of ETF Research for Morningstar Investment Management Asia