Asia ETF Roundup (Industry) – March 2022

TraHK announces Hang Seng Investment Management will step in as manager; Chinese ADRs identified under the Holding Foreign Companies Accountable Act (“HFCAA”) 

Jackie Choy, CFA 08 April, 2022 | 11:10
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – March 2022”. 

 

ETF Industry News

Tracker of Hong Kong (TraHK) Announces Hang Seng Investment Management to Succeed as Manager

On 29 March 2022, the trustee of the Tracker Fund of Hong Kong announced that the fund’s Supervisory Committee has completed a manager review and identified Hang Seng Investment Management (HSVM) as successor to State Street Global Advisors Asia as the fund’s manager. The manager transition is expected to be completed in Q3 2022, subject to regulatory approvals.

The manager change also comes with a fee reduction. The fund’s management fee will be decreased from 0.025% to 0.05% to 0.015% to 0.045% per annum. The effective management fee will be lowered to 0.022% per annum in the first 3 years and will have a further reduction to 0.019% per annum from the fourth year onward. The trustee fee will also be reduced to the same level. The announcement can be found here.

Chinese ADRs Identified Under Holding Foreign Companies Accountable Act (“HFCAA”)

During the month of March, the U.S. Securities and Exchange Commission identified 11 companies under the Holding Foreign Companies Accountable Act (“HFCAA”). Recall that the HFCAA became effective on 18 December 2020, and “the Public Company Accounting Oversight Board (“PCAOB”) has the responsibility for determining that it is unable to inspect or investigate completely a registered public accounting firm or a branch or office of such a firm because of a position taken by an authority in a foreign jurisdiction.” The SEC previously cited that 273 companies could potentially be identified under the HFCAA, based on a review in calendar year 2020. 

The 11 companies identified thus far were mainly Chinese companies with ADRs listed in the U.S., including Yum China (YUMC; 09987), BeiGene (BGNE; 06160; 688235), Weibo (WB; 09898), Baidu (BIDU; 09888), etc. According to the HFCAA and the companies’ announcements, a company’s ADR could be delisted from a U.S. stock exchange if the company is identified on the list for three consecutive years.

Updates on Russia – MOEX Partially Reopens

The Moscow Stock Exchange (MOEX) reopened on 24 March after having been closed for nearly a month. Only 33 ruble denominated stocks were open for trading for 4 hours per day. Short selling was banned and non-Russian investors were also banned until 1 April.

Index announcements:

  • FTSE Russell - FTSE Russell released an FAQ concerning its equity and fixed income indices concerning Russia-Ukraine related sanctions and treatment. The FAQ can be found here.
  • MSCI – MSCI is seeking feedback on the investability of securities issued by companies that are not classified by MSCI in Russia but which have significant linkages to Russia.

 

Chinese Equity ETF Watch – Inflows into Offshore Chinese Equity ETFs and Outflows from Onshore Chinese Equity ETFs

  • Hong Kong-domiciled ETFs in the China Equity Category saw net inflows estimated at USD 0.2 billion in March, mainly coming from the Hang Seng China Enterprises Index ETF (02828/82828).
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw estimated net outflows of USD 0.6 billion in March, coming mainly from the ChinaAMC CSI 300 Index ETF (83188/03188).
  • Hong Kong-domiciled ETFs in the China Equity Category and the China Equity – A-Shares Category saw estimated year-to-date net inflows of USD 0.6 billion and net outflows of USD 0.4 billion, respectively.
  • We observed a similar flow pattern in the U.S. in March. We estimated net inflows of USD 0.8 billion from the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) and net inflows of USD 0.3 billion from the KraneShares CSI China Internet ETF (KWEB). Meanwhile we estimate net outflows of USD 0.7 billion from the Xtrackers Harvest CSI 300 China A ETF (ASHR), which tracks the onshore Chinese equity market. 

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New Launches and Listings

China: 17 ETF New Listings

  • Chinese ETF providers listed 17 new ETFs on the Shanghai Stock Exchange and Shenzhen Stock Exchange in March 2022. These launches included 3 gold ETFs and 14 thematic/sector ETFs.
  • These listings put the total number of ETFs listed in China at 681 (249 ETFs on the SZSE, 432 ETFs on the SSE).

Hong Kong: 4 New ETF Listings

  • ETF providers in Hong Kong listed 2 actively managed ETF, an ESG ETF and a carbon futures ETF on the Hong Kong Exchange.
  • This latest addition put the total number of ETFs listed in Hong Kong at 246 (160 ETFs and 86 multiple counters, including 28 leveraged/inverse products).

India: 1 New ETF Listing

  • ETF providers in India listed a bond ETF on local exchanges in March.

South Korea: 6 ETF New Listings

  • Korean ETF providers listed 2 actively managed ETF, 3 thematic ETF and a broad market mid-cap exposure on Indian equities on the Korea Exchange.
  • These listings put the total number of ETFs listed in South Korea at 551.

Taiwan: 1 New ETF Listing

  • Shin Kong Financial Holding launched a semiconductor ETF in March on the Taiwan Stock Exchange.
  • This listing put the total number of ETFs listed in Taiwan at 224.

 

ETFs Launched in March 2022 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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