FTSE Group has licensed the FTSE China A50 Net Total Return Index to Hong Kong-based CSOP Asset Management Limited (CSOP) to serve as the underlying benchmark for the CSOP FTSE CHINA A50 ETF, a new tracker fund offering both retail and institutional investors direct exposure to the China A Shares market in North America.
The CSOP FTSE China A50 ETF is traded on the New York Stock Exchange and denominated in US dollars. There are now 117 ETFs in North America that track FTSE benchmarks, although this is the first in the US to track the flagship FTSE China A50 index.
With the FTSE China A50’s 70% market share of the offshore China A-shares ETF market, the new ETF will enable US investors to directly access one of the world’s most important equity markets, said Chen Ding, chief executive of CSOP, in a statement. He added that there has been a growing demand from investors in North America to increase their exposure in China.
The FTSE China A50 comprises the largest 50 A-share companies by full market capitalisation listed on the Shanghai and Shenzhen Stock Exchanges and is a tool used by both domestic and international investors in a range of QFII/RQFII investment portfolios. FTSE is the leading provider of China-focused indices, with ETFs tracking the FTSE China Index Series accounting for approximately US$22bn assets under management (AUM).
There are over 2,500 products featuring FTSE China benchmarks across jurisdictions including 400 live products featuring the FTSE China 50, 287 products featuring the FTSE China 25, and 62 products featuring the FTSE China A50, according to SRP data. The 36 live structured products in the US market are all linked to the FTSE China 25.
The launch in the US follows recent listings of the CSOP FTSE China A50 ETF series in Hong Kong and the UK, and is part of the fund manager’s plans to capitalise on the Renminbi Qualified Foreign Institutional Investor (RQFII) programme which allows institutional investors with offshore renminbi deposits to invest back into the domestic Chinese market. CSOP is currently the largest RQFII manager of A-shares globally.
China A-shares are not currently included in FTSE’s standard global benchmarks. The region has been on FTSE’s Watch List since 2005 and FTSE’s Country Classification Advisory Committee has been able to monitor the gradual and positive market developments on a number of key areas of FTSE’s Quality of Markets Matrix, said FTSE Group.
Earlier this week, FTSE TMX Global Debt Capital Markets, a joint venture between FTSE and TMX Group’s information services division, TMX Datalinx, launched the FTSE China Onshore Bond Index Series, a new benchmark tracking Chinese bond markets.
The new suite of benchmarks has been designed to be used as an underlying for index-linked products aimed at international investors seeking access to the world’s third-largest onshore bond market. The series marks another first in the region, following the FTSE-BOCHK Offshore RMB Bond Index Series which was launched in October 2013.
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