The Chinese government has kept a firm grip on its domestic equities market, isolating its stock markets from direct foreign access. However, China and Hong Kong may begin to allow free access to stocks in each others’ markets for the first time through exchange traded fund investment products, according to a report Tuesday.
Chinese regulators may approve a plan to issue ETFs linked to Hong Kong-listed stocks around June 29, reports Amy Li for The Wall Street Journal. The ETFs would trade on both the Shanghai and Shenzhen exchanges. [China ETF Options Trade Scrutinized After Rate Cut]
Additionally, ETFs linked to China’s A-shares will begin trading on the Hong Kong Stock exchange. A-shares are stocks of mainland China-based companies traded on the Chinese exchanges and are usually only available to mainland citizens; however, some foreign investors may gain access through the Qualified Domestic Institutional Investors program. [China Readies ETFs]
Two fund managers have already filed with the Chinese regulatory commission to launch ETFs tracking Hong Kong shares. China Asset Management Co. wants to market an ETF tied to the Hang Seng that would trade on the Shenzhen exchange, and the E Fund Management Co. seeks to launch an Hang Seng ETF that would trade on the Shanghai exchange.
Securities regulators may approve four managers to launch A-shares ETFs, including China Asset Management, E Fund Management, Harvest Fund Management and China Southern Fund.
For more information on the ETF industry, visit our current affairs category.
Max Chen 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.