SSgA sanguine on ETF outlook for Asia Pacific

14 April 2014   Category: News, Asia, Australia, China, Global, Hong Kong, Japan   By Hui Ching-hoo

Asia Pacific’s ETF market has been gathering momentum. The major ETF markets in the region –Japan, Australia, Hong Kong and China – all recorded positive capital inflows during the first quarter of this year, according to State Street Global Advisors (SSgA).

Frank Henze, managing director and head of SPDR ETFs, Asia Pacific at SSgA, observed that an increasing number of Asian investors have wagered on ETFs as part of their strategic allocation for diversification purposes. “One Asian sovereign wealth fund began an overseas ETF investment programme in April for strategic asset allocation purposes, deploying over US$500 million into US broad index ETFs,” he observed. “Diversification into global equities using ETFs continues to be the overriding trend for large Asian institutions and insurance companies.”     

Furthermore, more investors have been utilising ETFs to capture tactical opportunities, transiting their assets between cynical/non-cynical sectors, especially emerging market equity ETFs, which have recently emerged as a focal point of interest among Asian institutions and insurance companies.

Pointing to Asian market trends, Mr. Henze said China is changing in nature and its structural importance will increase for investment portfolios, in which ETFs increasingly offer good value. “There will be a continuing trend to invest through ETFs in Asia. We see more clients and new users of ETFs, particularly from the insurance industry,” he said, adding that market practitioners need to improve retail participation, market liquidity, market education, and fund passporting in order to further facilitate the development of the industry.