ETF Market Heats Up in Asia

October 4th at 6:10am by Tom Lydon

A new trend is developing in emerging markets, as more exchanges are listing ETFs. China has finally approved the ETF to trade on its exchanges, with other countries like Vietnam close behind.

Lippo Limited, the Hong Kong investment company of Indonesia’s Riady family-run Lippo Group, listed the first Hong Kong ETF focused on solely in property in greater China – the Lippo Select HK & Mainland Property ETF, reports Paul J. Davies on Financial Times.

ETFs have been slow to warm up in Asia, however, regulators are now aware of the potential to attract foreign capital and generate more investor interest, both domestic and abroad.

“Asia is in a relatively early stage of ETF development but China, Hong Kong and South Korea are among the markets forging ahead. In terms of the number of newly-listed ETFs so far this year, Hong Kong has topped the regional league table with 30, according to Morningstar Asia. But measured by assets under management China saw the strongest growth, of about 60%,” Heather Dale wrote for Financial Times.

Hong Kong is known as the entryway to China, so the latest approval of ETF development there has opened up the path for more funds to open on subsequent exchanges. Hong Kong stock ETFs are listed in China but trade directly into shares in Hong Kong. [China ETF Market Posting Solid Growth]

The cross-market appeal of ETFs, which gives investors access to products that can trade in Shenzhen and Shanghai markets simultaneously is a major reason these tools have been approved. ETFs were first discovered on accident during the Asian financial crisis, when the Hong Kong government wanted to unload various companies in a quick and effective manner.[Three Emerging Market ETFs on an Uptrend]

Nathan Lin, head of ETFs in Hong Kong for E Fund Management, mainland China’s biggest manager of the listed investment products, says innovations including the first renminbi-denominated funds listed outside of China and the first cross-border and cross-market ETFs will help. [Hong Kong Listed A-Shares ETF Launches]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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