Even though China might be extremely keen on attracting more foreign money into its stock markets, Jane Leung, head of ETFs in Asia for iShares, says domestic funds make up the vast proportion of what’s in the the market. This leaves plenty of growth for foreign investment, and the ETF vehicle is perfect to maintain the liquidity that an overseas investor would seek. Foreign money still accounts for only 3% of the Chinese stock markets.
Frank Henze, head of ETFs Asia-Pacific at State Street Global Advisors, noted that Asian institutions were less likely than US institutions to use ETFs in tactical investment functions such as portfolio rebalancing or for putting money to work quickly in the market, a practice known as cash equitization.
Tisha Guerrero contributed to this article.