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ChinaAMC's Hong Kong unit launches third NASDAQ-linked L&I product

By Asia Asset Management  
September 9, 2019

China Asset Management Corp.’s (ChinaAMC) Hong Kong unit has launched a new inverse product that will allow investors to gain from any decline in US technology stocks.

An inverse product uses derivatives to produce a daily performance that is the opposite of a particular benchmark.

Leveraged and inverse, or L&I, products are like exchange-traded funds (ETFs), although they are not categorised as such by Hong Kong’s securities regulator.

The new ChinaAMC Direxion NASDAQ-100 Daily (-2x) inverse product is designed to generate returns that are twice the inverse of the technology-heavy NASDAQ-100 Index, which includes companies such as Microsoft Corp and Facebook Inc.

It was listed on the Hong Kong Exchange and Clearing (HKEX) on September 6. The adviser on the product was US L&I ETF manager Rafferty Asset Management

This is the second two-time inverse product in Hong Kong. The first was launched by rival CSOP Asset Management in May.

According to China Asset Management (Hong Kong), there is growing interest in the global technology sector from investors in Asia.

“The [new] product gives investors more flexibility in diversifying portfolio risk and exposures [to the technology sector] in light of market volatility,” the company says in a statement on September 5.

It’s the company’s seventh L&I product, and the third in its NASDAQ-100 series following the introduction of the NASDAQ-100 Daily (2X) and (-1X) products in 2016.

“We’re seeing significant interests from investors in trading our NASDAQ-100 Daily (-1X) inverse product,” Frederick Chu, the company’s head of ETFs, says in the statement. “In response to our investors’ request, we decided to come up with the (-2X) inverse version in order to cater for our investors’ needs.”

There were 22 L&I products listed in Hong Kong with total market capitalisation of HK$320 million (US$41 million) as of July 2019, according to figures from HKEX.

China Asset Management (Hong Kong) currently has $6.8 billion of total assets, and its Beijing-based parent company had $160 billion of assets as at March 31, 2019.