Exchange traded funds tracking stocks trading on China’s mainland saw big inflows in the weeks leading up to the Nov. 17 launch of the Shanghai-Hong Kong Stock Connect.
In the week ended Nov. 18, the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), the largest U.S.-listed A-shares ETF, added $54.1 million in new assets or more than 10% of its current assets under management total of $517.6 million.
On Nov. 17, the day the Shanghai-Hong Kong Stock Connect, the Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK) hauled in $3.4 million, the ETF’s largest single-day inflow since March, according to Bloomberg.
ASHR has added $99 million this month $112.4 million since the start of September. U.S. investors’ thirst for A-shares ETFs has been so strong that on two separate occasions over the past 70 days, Deutsche Asset & Wealth Management has been forced to announce limited creations for ASHR and the the Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS) because that heavy demand forcing the two ETFs to bump up against their respective Renminbi Qualified Foreign Institutional Investor (RQFII), which allows the funds to purchase A-shares equities.
The most recently announced creation limits for ASHR and ASHS go into effect on Nov. 24. In a statement, Deutsche Asset & Wealth Management said starting on Nov. 24, ASHR and ASHS will accept just one creation unit of 50,000 shares each day per fund. [A-Shares ETFs Falter on First Day of Stock Connect]
A-shares small-cap ETFs such as ASHS and the rival Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT) are new funds and have been overlooked compared to their large counterparts, but some investors have been nibbling at these products. ASHS came into Wednesday with nearly $22 million in assets under management while CNXT had almost $17 million. Since the start of August, ASHS and CNXT have pulled in $15.1 million and $14.3 million, respectively. [A-Shares Small-Caps Merit Attention]
The Shanghai-Hong Kong Stock Connect is aimed at increasing securities trading between Hong Kong and mainland China.
The Hong Kong, Shanghai and Shenzhen exchanges are the sixth-, seventh- and tenth-largest, respectively, in the world by market value. Of the nearly 570 Shanghai-listed stocks that will be made available in the Connect effort, those stocks represent 90% of the Shanghai Stock Exchange’s market value and 80% of the daily turnover, according to KraneShares data.
Deutsche X-trackers Harvest CSI 300 China A-Shares Fund
ETF Trends editorial team contributed to this post.