Asia ETF Roundup (Industry) – July 2021

China crackdown on education and tech sector

Jackie Choy, CFA 05 August, 2021 | 12:12
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) July 2021”. 

 

ETF Industry News

China Crackdown on Education and Tech Sector

During the month, Chinese regulators announced a number of regulations and orders in relation to companies in the education and tech sector:

  • After the IPO debut of Didi Global (DIDI), China’s ride-hailing service provider, Chinese regulators ordered Didi’s apps to be removed from Chinese app stores—on account of the operator’s data breaches. The announcement can be found here.
  • On 24 July, Chinese regulators announced a ban on for-profit school tutoring and tutoring companies raising capital from overseas investors or through public listings. The announcement can be found here.
  • On 24 July, Chinese regulators ordered Tencent to end exclusive music licensing rights within 30 days and fined the company RMB 500,000 (USD 77k). The announcement can be founded here.
  • On 26 July, Chinese regulators issued guidelines requiring the food-delivery sector to improve deliverers’ pay and other benefits. The announcement can be found here.

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Updates on the U.S. Executive Order

Index Provider Updates

On 7 July, FTSE Russell announced it would remove 20 Chinese firms from the FTSE Global China A Inclusion indices Index and the FTSE Global Equity Index Series (as well as their associated index) from the open on 28 July 2021. The announcement can be found here.

On 8 July, MSCI announced that 7 Chinese firms would be deleted from its indexes from the close on 26 July. As of 7 July, the affected stocks represented 0.005% of the MSCI ACWI IMI and 0.042% of the MSCI EM IMI. The announcement can be found here.

 

ETF Updates

State Street Global Advisors filed a fifth addendum to the prospectus of the Tracker Fund of Hong Kong (02800, listed in Hong Kong) on 29 July citing that the units of Tracker Fund of Hong Kong will not be offered to “U.S. Persons” or sold in the United States. According to the announcement by SSGA, U.S. Persons who continue to hold units of Tracker Fund of Hong Kong after 3 June 2022 may be prevented by U.S. law from disposing of or otherwise dealing in their units.

Chinese Equity ETF Watch – Hong Kong-Domiciled Offshore and Onshore ETFs See Small Net Flows; Major US-Domiciled ETFs See Estimated Net Inflows of USD 1.9 billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated net inflows totalling USD 41 million in July. Net inflows from the Hang Seng China Enterprises ETF (02828), estimated at USD 106 million, were partially offset by the net outflows from the Global X China Electric Vehicle and Battery ETF (02845/09845), estimated at USD 74 million.
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw estimated net outflows of USD 89 million in July, coming mainly from the ChinaAMC CSI 300 ETF (83188/03188) which recorded net outflows estimated at USD 202 million. The outflows were partially offset by net inflows to the Premia China STAR50 ETF (03151/09151/83151), estimated at USD 97 million.
  • As of July 2021, the Hong Kong-domiciled ETFs in the China Equity Category saw estimated outflows USD 467 million while Hong Kong-domiciled ETFs in the China Equity – A-Shares Category saw estimated inflows of USD 32 million.
  • In the U.S. in July, we estimated total net inflows of USD 0.4 billion from the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI). The Xtrackers Harvest CSI 300 China A ETF (ASHR) saw estimated net ouflows of USD 0.3 billion while the KraneShares CSI China Internet ETF (KWEB) saw estimated net inflows of USD 1.8 billion.

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New Launches and Listings

China: 41 ETF New Listings

  • Chinese ETF providers listed 23 new ETFs on the Shanghai Stock Exchange and 18 new ETFs on the Shenzhen Stock Exchange. These include 26 thematic/sector ETFs, 9 ETFs tracking the CSI STAR&CHINEXT 50 Index, 4 ETFs tracking ESG indices, 1 dividend ETF and 1 gold ETF.
  • These listings put the total number of ETFs listed in China at 529 (178 ETFs on the SZSE, 351 ETFs on the SSE).

 

Hong Kong: 5 ETF New Listings

  • Hong Kong ETF providers listed 5 new thematic ETFs on the Hong Kong Exchange.
  • These listings put the total number of ETFs listed in Hong Kong at 232 (152 ETFs and 80 multiple counters, including 26 leveraged/inverse products).

 

South Korea: 14 ETF New Listings

  • Korean ETF providers listed 14 ETFs on the Korea Exchange. These include 2 ETFs tracking the KOSPI 200, 10 thematic ETFs and 2 ESG ETFs.
  • These listings put the total number of ETFs listed in South Korea at 497.

 

Taiwan: 1 New ETF Listing

  • Cathay SITC listed a thematic ETF on the Taiwan Stock Exchange.
  • The listing of the ETF put the total number of ETFs listed in Taiwan at 219, of which 98 are bond ETFs.

 

Malaysia: 1 ETF New Listing

  • Value Partners listed an ETF tracking the Dow Jones Islamic Market China A 100 Index on the Bursa Malaysia.
  • The listing of the ETF put the total number of ETFs listed in Malaysia at 19.

 

ETFs Launched in July 2021 in the Asia ex-Japan Region

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About Author

Jackie Choy, CFA  is the Director of ETF Research for Morningstar Investment Management Asia

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