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Asia ETF Roundup (Industry) – August 2022

Tracker Fund of Hong Kong: Manager change on 19 September; Hang Seng Index constituents increases to 73; PCAOB/CSRC/MoF signed Statement of Protocol opens access for PCAOB to conduct on-site inspections

Jackie Choy, CFA 08 September, 2022 | 10:34
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For economic and market news relating to Asian ETFs, please refer to our “Asia ETF Roundup (Market) – August 2022”.

ETF Industry News

Tracker Fund of Hong Kong: Manager Change on 19 September

As had been announced in March 2022, the manager transition of the Tracker Fund of Hong Kong (02800) to Hang Seng Investment Management (HSVM) from State Street Global Advisors Asia will be completed in Q3 2022. In August, the trustee of TraHK announced that the manager transition will be effective from 19 September.

Back in March, along with the change of manager, it was also announced that the fund’s management fee would be decreased from 0.025% to 0.05% to 0.015% to 0.045% per annum. Furthermore, in August it was announced that a new RMB Trading Counter of TraHK will be introduced under the Dual Counter mode. Units of TraHK on the Stock Exchange will be traded in HKD (02800) and Renminbi (82800), while dividends will only be paid out in HKD.

Hang Seng Index August Review -- Constituents Count Increases to 73

On 19 August, Hang Seng Indexes announced the results of the August 2022 review of its benchmark series. The total number of constituents in the Hang Seng Index will increase to 73 from 69, effective on 5 September. The full index review results, along with the latest pro forma weightings of the constituents in the Indexes can be viewed here.

Constituent changes at the August Index Review:

Hang Seng Index

  • Additions: China Shenhua Energy - H Shares (01088), Chow Tai Fook Jewellery Group (01929), Hansoh Pharmaceutical Group (03692), Baidu – SW (09888)

Hang Seng China Enterprises Index

  • Additions: SenseTime Group (00020)
  • Removals: China Pacific Insurance Group (02601) 

Hang Seng TECH Index

  • No changes in constituents.

 

Another 4 Companies Identified Under Holding Foreign Companies Accountable Act (“HFCAA”); PCAOB/CSRC/MoF Signed Statement of Protocol Opens Access for PCAOB to Conduct On-site Inspections

In August, the U.S. Securities and Exchange Commission identified a further 4 companies under the Holding Foreign Companies Accountable Act (“HFCAA”). This puts the total number of companies on the provisional list and conclusive list of issuers identified under the HFCAA at 163 as of the end of August 2022. Companies added to the list included Uxin Limited (UXIN) and Global Cord Blood Corporation (CO). According to the HFCAA and the companies’ announcements, a company’s ADR could be delisted from a U.S. stock exchange if the company remains in the list for three consecutive years.

On 26 August, the Public Company Accounting Oversight Board (PCAOB) signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People's Republic of China. According to the press release, the agreement takes “the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S law”. The PCAOB is prepared to have inspectors on the ground by mid-September for on-site inspections and investigations of firms headquartered in the mainland and Hong Kong.

Chinese Equity ETF Watch – Net Outflows of USD 1 Billion from Chinese Equity ETFs in the U.S.

  • Hong Kong-domiciled ETFs in the China Equity Category saw small net inflows estimated at USD 30 million in August, mainly driven by an estimated net inflow of USD 108 million to the Hang Seng China Enterprises Index ETF (02828/82828) partly offset by an estimated net outflow of USD 73 million from the iShares Core MSCI China ETF (02801).
  • Hong Kong-domiciled ETFs in the China Equity - A-Shares Category saw estimated net outflows of USD 100 million in August, mainly driven by the net outflows from the ChinaAMC CSI 300 ETF (83188/03188), estimated at USD 49 million, and the CSOP FTSE China A50 ETF (82822/02822), estimated at USD 15 million.
  • In the first eight months of 2022, Hong Kong-domiciled ETFs in the China Equity Category and the China Equity – A-Shares Category saw estimated net inflows of USD 1.1 billion and USD 0.14 billion, respectively.
  • In the U.S., the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) recorded small outflows, estimated at a combined USD 0.04 billion. The KraneShares CSI China Internet ETF (KWEB) and the Xtrackers Harvest CSI 300 China A ETF (ASHR) saw estimated net outflows of USD 0.6 billion and USD 0.3 billion, respectively.

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New Launches and Listings

China: 16 ETF New Listings

  • Chinese ETF providers listed 16 new ETFs on the Shanghai Stock Exchange and Shenzhen Stock Exchange in August. These included 6 thematic/sector ETFs, 1 ESG ETF, 2 strategic-beta ETFs and 7 broad market ETFs tracking CSI 100, CSI 1000 and NASDAQ 100 Index.
  • This brings the total number of ETFs listed in China at 730 (273 ETFs on the SZSE, 457 ETFs on the SSE).  

 

Hong Kong: 3 ETF New Listings

  • Hong Kong ETF providers listed a hedged share class (USD counter) of an existing ETF tracking the ICE 10+ China Government & Policy Bank Index and a bond ETF (HKD and USD counters) tracking the Bloomberg MSCI Asia Green Bond Index.
  • The ChinaAMC Hang Seng Stock Connect Hong Kong SmallCap Index ETF (03157) was delisted from the Hong Kong Exchange.
  • This brings the total number of ETFs listed in Hong Kong at 254 (167 ETFs and 88 multiple counters, including 29 leveraged/inverse products).

 

South Korea: 16 ETF New Listings

  • Korean ETF providers listed 12 actively managed ETFs (mostly with bond/allocation exposures), 3 thematic/sector ETFs, and a leveraged ETF.
  • These brings the total number of ETFs listed in South Korea at 611.

 

Taiwan: 3 New ETF Listing

  • ETF providers in Taiwan launched 2 thematic ETFs on wafer manufacturers and financials & data, respectively, and 1 high dividend ETF on the Taiwan Stock Exchange.
  • An ETF tracking the SSE 50 Index and a bond ETF were delisted.
  • This brings the total number of ETFs listed in Taiwan at 228.

 

India: 7 New ETFs Listing

  • ETF providers in India listed 5 strategic-beta ETF and a thematic/sector ETFs on infrastructure and an ETF tracking silver prices on local exchanges. 

ETFs Launched in August 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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