Asia ETF Roundup (Industry)–November 2021

Hang Seng Index expands its roster of constituents to 64; Singapore’s MAS opens a consultation on its complex products regime; A China-Singapore ETF market connect may be in the works

Jackie Choy, CFA 09 December, 2021 | 14:31
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) November 2021”.

 

ETF Industry News

Singapore MAS Consultation on Complex Products Regime

The Monetary Authority of Singapore (MAS) launched a consultation on proposed changes to its complex products regime. The MAS prescribes a list of products that are well established in the market and have terms and conditions that are generally understandable as Excluded Investment Products (EIPs), whereas products not falling within the list of EIPs are referred as Specified Investment Products (SIPs), which are more complex products and must be sold with enhanced distribution safeguards. The changes proposed by the MAS include the classification of all authorized and recognized Collection Investment Schemes (CISs) as EIPs, except for a limited set of more complex funds that apply alternative investment strategies or integrate unique features not normally found in traditional funds, such as leveraged/inverse products. The consultation mentioned that the expansion of the scope of EIP-CIS will “make it easier for retail investors to invest in diversified and professionally managed funds, including exchange traded funds (ETFs)”. Currently, out of the 33 ETF listed on the Singapore Exchange, 7 are classified as SIPs. The two leveraged and inverse products that were listed on 1December are classified as SIPs.

 

First Pair of Local Equity Market Leveraged & Inverse Products Launched in Singapore

On 1 December, Phillip Capital listed a pair of leveraged & inverse products on the Singapore Exchange. The pair of products offer daily leveraged (2x) and inverse (-1x) exposure to the MSCI Singapore Index. This is the first pair of local equity index leveraged & inverse products in Singapore. Previously, the Xtrackers S&P 500 Inverse Daily Swap UCITS ETF traded on the Singapore Exchange but the product was delisted in August 2020.

 

China-Singapore ETF Market Connectivity to Come?

At present, there are various ETF market connect schemes between China, Japan, Hong Kong and South Korea. At a public financial forum in China, the Vice Chairman of the China Securities Regulatory Commission, Fang Xinghai, commented that the Shenzhen Stock Exchange and the Singapore Exchange had been working together to plan an ETF market connect scheme between the two markets. However, no timeline or other operational details were mentioned. The speech by Fang Xinghai can be found here.

 

Hang Seng Index November 2021 Review – Increases to 64 Constituents

On 19 November, Hang Seng Indexes released the results of the November 2021 review of its benchmark series. The total number of constituents of the Hang Seng Index will be increased to 64 from 60. The change was effective 6 December 2021. The full index review results, along with the latest pro forma weightings of the constituents in the Hang Seng Index can be viewed here

Constituent changes at the August Index review:

Hang Seng Index

  • Additions: China Resources Beer 00291), ENN Energy (02688), JD.com (09618), and Netease (09999)

 

Hang Seng China Enterprises Index

  • Additions: Innovent Biologics (01801)
  • Removals: China Evergrande (03333) 

 

Chinese Equity ETF Watch – Hong Kong-Domiciled Offshore Chinese Equity ETFs See Net Inflows of USD 0.2 billion; Major US-Domiciled ETFs See Estimated Net Inflows of USD 0.9 billion

  • Hong Kong-domiciled ETFs in the China Equity Category saw estimated net outflows totaling USD 147 million in November. This was primarily driven by net inflows from the Global X China Electric Vehicle and Battery ETF (02845/09845), estimated at USD 157 million.
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw small estimated net inflows of USD 59 million in November.
  • For the year through November, Hong Kong-domiciled ETFs in the China Equity Category have seen estimated outflows of USD 171 million while Hong Kong-domiciled ETFs in the China Equity – A-Shares Category have experienced estimated inflows of USD 134 million.
  • In the U.S. in November, we estimated total net inflows of USD 223 million to the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI). The KraneShares CSI China Internet ETF (KWEB) saw estimated net inflows of USD 0.7 billion.
  • For the year through November, the KraneShares CSI China Internet ETF (KWEB) has seen estimated net inflows of USD 7.8 billion.

 

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New Launches and Listings

China: 18 ETF New Listings

  • Chinese ETF providers listed 6 new ETFs on the Shanghai Stock Exchange and 12 new ETFs on the Shenzhen Stock Exchange in November. These included 12 thematic/sector ETFs, 5 ETFs tracking China-HK stock connect indices, and 1 dividend ETF.
  • Including the above listings, the total number of ETFs in China stands at 601 (212 ETFs on the SZSE, 389 ETFs on the SSE).

 

Hong Kong: 2 ETF New Listings; 1 ETF delisting

  • Hong Kong ETF providers listed 2 thematic ETFs on the Hong Kong Exchange.
  • An ETF (along with its multiple counters) tracking MSCI China A Inclusion Index was delisted from the Hong Kong Exchange on 15 November.
  • Including the above listings and delistings, the total number of ETFs in Hong Kong stands at 227 (146 ETFs and 81 multiple counters, including 27 leveraged/inverse products).

 

India: 2 ETF New Listings

  • Indian ETF providers listed 1 sector ETF and 1 ETF tracking the Nifty 50 Equal Weight Index on India’s stock exchanges.

 

Singapore: 2 ETF New Listings

  • Singapore ETF providers listed 2 REIT ETFs (along with their USD counter) on the Singapore Exchange.
  • Including the above listings, the total number of ETFs in Singapore stood at 50 (33 ETFs and 17 multiple counters).

 

South Korea: 6 ETF New Listings

  • Korean ETF providers listed 6 ETFs on the Korea Exchange. These included 1 thematic ETFs, 1 ETF tracking broad market index, and 4 active ETFs.
  • Including the above listings, the total number of ETFs in Korea stood at 526 at month end.

 

Taiwan: 1 New ETF Listing

  • Cathay Securities Investment Trust listed 1 thematic ETF on the Taiwan Stock Exchange.
  • Including the above listing, the total number of ETFs in Taiwan stands at 218, of which 92 are bond ETFs.

 

ETFs Launched in November 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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