Hong Kong to delist ETFs due to lacklustre NAVs

12 August 2014   Category: News, Asia, China, Global, Hong Kong   By Derek Au

Two Hong Kong-listed ETFs issued by Da Cheng International Asset Management (DC International), an offshore arm of Chinese asset manager Dacheng Fund Management, will delist owing to relatively low NAVs.

The ETFs in question are the Da Cheng CSI Hong Kong Private-owned Mainland Enterprises Tracker and the Da Cheng CSI Hong Kong State-owned Mainland Enterprises Tracker, both of which invest in Hong Kong-listed H-shares. The ETF prices plummeted by 13.7% and 17.8%, respectively, last Friday (August 8) after the announcement was made.

According to a statement, DC International has the right to terminate each of the ETFs if the aggregate NAV of all outstanding units of the ETF is less than HK$100 million (US$13 million).

The asset manager has set aside a provision of HK$850,000 for each of the ETFs for discharging future costs until the termination date. After provision, the ETFs had a NAV of around HK$2.2 million and HK$2.9 million, respectively, before trades commenced last Friday; well below the threshold level of HK$100 million.

The two ETFs, which listed on the Hong Kong Stock Exchange in December 2010, will cease trading from September 17. No redemption of units will be possible from that date onwards.

Currently, DC International has three ETFs listed in Hong Kong. Besides the two about to delist, it has another ETF which invests in Mainland consumer companies listed in Shanghai or Shenzhen, with a total NAV of around HK$13 million as of last Friday.