Mainland ETFs dominate as China-Hong Kong trading scheme goes live

Investors in mainland China and Hong Kong began trading exchange traded funds across each other’s markets this week, with strategies from the mainland far outnumbering their Hong Kong-listed counterparts.

Under the new cross-border trading scheme, which debuted on the first trading day after the 25th anniversary of the handover of Hong Kong on July 1, 83 mainland-listed ETFs, including 53 in Shanghai and 30 in Shenzhen, can now be traded by international investors via the northbound Stock Connect route, compared with only four Hong Kong-listed ETFs during the initial stage.

As of the end of June, the 83 ETFs ran a combined Rmb674.6bn ($100.4bn) in assets, Wind data show, accounting for nearly 70 per cent of the mainland ETF market.

Twenty Chinese managers account for all 83 ETFs, according to the latest list of eligible securities published by Hong Kong Exchanges and Clearing.

In terms of assets under management, however, China Asset Management holds the top spot, with its eligible products running a combined Rmb136.7bn in assets as of the end of June, far ahead of GF Fund Management’s Rmb38.7bn, even though GF Fund provides the highest number of eligible ETFs.

ETFs that track broad-based indices are among the largest of all eligible mainland-listed products. ChinaAMC’s SSE 50 ETF leads the pack with Rmb51.3bn in assets as of the end of March, Wind data show. Huatai-PineBridge Fund Management’s CSI 300 ETF and China Southern Asset Management’s CSI 500 Index ETF follow with Rmb44.7bn and Rmb40.3bn in assets respectively.

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

Meanwhile, the Shanghai and Shenzhen stock exchanges have added four Hong Kong-listed ETFs to the southbound route for mainland investors. They include the Tracker Fund, CSOP Hang Seng Tech Index ETF, Hang Seng China Enterprise Index ETF and iShares Hang Seng Tech Index ETF.

The funds saw mixed performance in trading on the scheme’s debut on July 4, with the Tracker Fund and HSCEI ETF unchanged and down 0.4 per cent respectively. The other two were both up around 0.3 per cent.