NEWS
Harvest geared up to go with RQFII ETF
10 October 2012
Category:
News, Asia, China, Hong Kong
By Hui Ching-hoo
Harvest Global Investments has received approval from Hong Kong’s Securities & Futures Commission (SFC) to launch its first RMB qualified foreign institutional investor (RQFII) ETF. The product is scheduled to be listed on the Hong Kong Exchange on October 12 and will track the MSCI China A Index.
The approval follows Harvest receiving an additional 2 billion yuan (US$318 million) RQFII quota from China’s State Administration of Foreign Exchange (SAFE) on August 29.
China AMC, E Fund and China Southern have already rolled out A-share ETFs in the last three months.
“From the beginning, it had been our intention to list after September in order to target global investors along with retail investors in Hong Kong who may have been off on their summer holidays prior to then,” a Harvest Global Investments spokesperson told Asia Asset Management. “We are also working on a dual counter – we want to make sure that we are the first dual counter ETF listed on the Hong Kong bourse.”
The spokesperson added: “MSCI is the gold standard amongst global institutional investors. The MSCI China A Index, which uses the same methodology as MSCI’s global equity indices, features broad, diversified and liquid coverage of the domestic China A-shares opportunity set. It provides the highest market representation and lowest level of stock and sector concentration within the top 20 securities relative to other indices available for the China A share market.”
“This index will complement the other MSCI indices such as the MSCI Emerging Markets Index, which currently only has allocations to China through H-Shares and red chips. We are prepared to market our ETF to investors around the world. Once the quota is fully subscribed, we intend to renew the quota.”
The spokesperson added that the firm and its business partners have developed a comprehensive marketing plan, which covers both the institutional and retail segments of the market. “We are already seeing a lot of interest from institutional investors as they want to participate in the long-term growth of the China market and take advantage of the historically low valuation levels of Chinese stocks. We are also confident that interest from the retail side will continue to grow after listing.”
According to the spokesperson, one of the key benefits of Harvest’s ETF is that it is the world’s first dual counter-listed RMB ETF to track the MSCI China A Index – which means investors will be able to settle units traded on the Hong Kong Exchange in RMB or HK$.
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