Van Eck Global Advisors is seeking to file a unique exchange traded fund (ETF) which will focus on the A-Shares in China, in hopes to harness China’s rebound to the fullest.
Van Eck has filed to launch the Market Vectors China A-Shares ETF on the New York Stock Exchange. The proposed ETF would start by dealing in swaps and derivatives to mimic its underlying index, reports Index Universe.
The catch is that the A-Shares are only available to local investors in China. Lately, there appear to be some leaks in the wall that is separating investors overseas. Namely, the Qualified Foreign Institutional Investor (QFII) program, a special license granting foreign investment groups access to local markets.
To get over the QFII hurdle, Van Eck says it will apply for QFII certification. The process is laden with red tape, though, and can take years in some cases.
Until direct access to the A-shares is granted, the ETF intends to invest in China A-share Access Products (CAAPs), swaps and other types of derivative instruments that have economic characteristics that are substantially identical to the economic characteristics of A-shares in order to gain access to the A-share market, so says the filing.
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