Regulator reports strong Q3 inflows to Hong Kong-listed ETFs

Hong Kong-listed exchange traded funds attracted “strong net inflows” of HK$16.2bn ($2.07bn) representing a 12 per cent jump in average daily turnover from the previous quarter, according to the Securities and Futures Commission.

The local regulator said that the territory’s total of 175 SFC-authorised ETFs had a market capitalisation of HK$369.5bn at the end of September.

Hong Kong-domiciled funds posted net inflows of HK$11.7bn in the three months to the end of September, but assets under management in these products fell by 3 per cent compared with the previous quarter to about HK$1.3tn.

However, the Mainland-Hong Kong ETF Connect experienced “robust growth” in turnover, with southbound trading by mainland investors in Hong Kong-listed ETFs recording an average daily turnover of HK$3.6bn and accounting for 15 per cent of the average daily turnover for eligible Hong Kong ETFs during the quarter.

This article was previously published by Ignites Asia, a title owned by the FT Group.

This share of eligible ETFs’ average daily turnover doubled on a six-month basis compared with the end of March.

The Hong Kong-China ETF Connect kicked off at the start of July last year and approved the inclusion by mainland Chinese and Hong Kong exchanges of eligible ETFs in mutual stock market access between the mainland and Hong Kong.

Under the mutual recognition of funds scheme between mainland China and Hong Kong, the SFC authorised 44 mainland funds as of the end of September, while the China Securities Regulatory Commission approved 38 Hong Kong funds.

Since the launch of the scheme, cumulative net flows to the end of September amounted to about Rmb1.06bn ($149mn) for mainland funds and about Rmb16.45bn for Hong Kong funds, while in the most recent quarter mainland funds and Hong Kong funds recorded net redemptions of about Rmb16.45mn and net subscriptions of roughly Rmb1.34bn, respectively.

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The local regulator also said in its quarterly report that Hong Kong’s environmental, social and governance fund space continued growing and that assets under management in this category now amounted to HK$1.25tn.

The SFC authorised 29 new unit trusts and mutual funds, including 19 locally domiciled funds, during the third quarter, as well as 122 unlisted structured investment products for public offering in the territory.

As of the end of September, there were 187 registered open-ended fund companies, of which 36 were newly registered during the quarter.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.