E Fund Management (Hong Kong) has A-Share ETF approved

21 August 2012   Category: News, Asia, China, Hong Kong  

E Fund Management (Hong Kong) announced on Monday (August 20) that its first RQFII ETF, the E Fund CSI 100 A-Share Index ETF, had been approved by mainland China and Hong Kong regulators and is expected to be listed on the Hong Kong Exchange on August 27.

The E Fund CSI 100 is one of the first RQFII A-Share ETFs to enter the market. It is RMB-denominated and will directly invest in the A-Share market using RMB capital raised overseas through the approved RQFII quota.

With an investment strategy of full replication, the E Fund CSI 100 aims to closely correspond to the performance of the CSI 100 Index after fees and costs. CSI 100, known as “Core A-Share”, is made up of the 100 largest A-Share issuers in terms of market capitalisation listed in the Shanghai and Shenzhen stock exchanges. As at the end of June 2012, these 100 component stocks accounted for 51% of total market capitalisation, 86% of earnings, 92% of total assets and 73% of equity in the Shanghai and Shenzhen A-Share markets. According to Bloomberg, as at July 31, the CSI 100 Index had outperformed FTSE China A50 Index over the past five years.

Nathan Lin, managing director of E Fund Management (Hong Kong), says: “As the largest index fund manager in mainland China, E Fund is pleased to see that the E Fund CSI 100 A-Share ETF, its first RQFII ETF, is set to be listed. This is not only a significant milestone for our company, but is also a breakthrough in the development of physical A-Share ETFs in Hong Kong. As a pioneer in the regional ETF market, E Fund is determined to introduce more innovative products to the market so as to satisfy demand for diversified products from institutional and retail investors.”

He adds: “Unlike other synthetic A-Share ETFs, as a physical ETF that tracks the 100 largest A-Share issuers in terms of market capitalisation listed on the Shanghai and Shenzhen exchanges, the E Fund CSI 100 A-Share ETF is not exposed to counterparty risks of derivatives, resulting in a more competitive total expense ratio. Investment and trading are denominated in RMB, reducing the impact of exchange rate fluctuations, and will therefore be safer and more cost-efficient for investors when they track the performance of A-Shares.”