The China Securities Regulatory Commission has approved the listing of two ETFs on the Shanghai and Shenzhen Stock Exchanges that will invest directly in Hong Kong-listed stocks.
“The approval of the Hong Kong stock ETFs represents a milestone”, said Dr Eddy Fong, Chairman of the Hong Kong Securities and Futures Commission (SFC). “Hong Kong stock ETFs provide an alternative channel for Mainland investors to participate in the Hong Kong securities market and further strengthen the co-operation between the Mainland and Hong Kong capital markets.”
The two ETFs will be benchmarked to indices complied by Hang Seng Indexes. One will be linked to the Hang Seng Index (HSI) and be issued by China Asset Management and listed on the Shenzhen Stock Exchange, while the other, issued by E Fund Management, will be based on the Hang Seng China Enterprises Index (HSCEI) and listed on the Shanghai Stock Exchange.
After the listing of the two new ETFs, the number of ETFs linked to the HSI worldwide will increase to six, with a total of more than $9.8 billion in assets under management. Vincent Kwan, Director and General Manager of Hang Seng Indexes, said: “Given the potential of the mainland China market, we will continue to explore opportunities for licensing more index-linked products. We will expand our index series to fulfil the demands of investors on the Mainland.”
Meanwhile, in a separate development, the SFC has also authorised the world’s first Renminbi Qualified Foreign Institutional Investor (RQFII) A-share ETF for listing on the Hong Kong Stock Exchange.
Through the RQFII investment quota granted by the Mainland authorities, an RQFII A-share ETF seeks to track the performance of an A-Share index by channelling renminbi raised outside mainland China to invest directly in a portfolio of A-shares, which replicates the performance of the underlying A-share index.
“RQFII A-share ETFs broaden the range of renminbi investment products in Hong Kong, offering Hong Kong investors an alternative channel to invest in the A-share market,” said Mrs Alexa Lam, the SFC’s Deputy Chief Executive Officer and Executive Director of Policy, China and Investment Products.