NAV of funds and unit trusts drops
Hong Kong's exchange and investment regulator, the Securities and Futures Commission (SFC), revealed in its report for the second quarter ended June 30 that the number of authorised mutual funds and unit trusts grew 5.3% on an annual basis to 2,173. Quarter-on-quarter, growth was logged at 1.9%.
However, total net asset value (NAV) of the funds and trusts available to Hong Kong investors dropped 6.9% year-on-year to US$1.287bn. On a quarterly basis the figure was up 0.9% from a quiet final quarter of the 2015-16 financial year, the SFC said.
Meanwhile, the number of investment-linked assurance schemes (ILAS) last quarter climbed 2% from the same period last year to exactly 300, down a single point from the previous quarter.
In total, the number of collective investment schemes, which include mutual and pension funds, trusts, ILAS and others, was up 4.5% from a year earlier to 2,743. The Commission highlighted the recent launch of two pairs of inverse and leverage products pegged to Korea's Kospi and Japan's Topix. The products are identical to inverse and leverage exchange-traded funds (ETF's), but are named 'products' to distinguish their day-trading nature from the buy-and-hold investment nature of conventional ETF's.
'During the quarter, we authorized various new investment products for listing in Hong Kong,' the SFC stated. 'The first crude oil futures ETF was listed on April, 29. As of the end of the quarter, three crude oil futures ETF's were authorized. The first German Ucits1 ETF's were cross listed in Hong Kong on May 18 and the first batch of four leveraged and inverse products was listed on June 13. The first six ETFs with US dollar, Hong Kong dollar and renminbi trading counters were listed on 29 June.'
The SFC also noted in its Q2 report that the variety of unlisted structured products, which include equity-linked investments and structured deposits, dropped from 11 types in the three months to the end of March to seven in the quarter ended June. The commission reported last month that the notional amount held in structured deposits as of June 30 was HK$951m (US$123m), while HK$14,270m was held in equity-linked investments.
A total of 282 products have been added to SRP's Hong Kong database in 2016, including 207 live products.
SFC's quarterly report comes a week after Hong Kong Exchanges and Clearing (HKEX) reported half-yearly results. The Exchange recorded a 32% YoY drop in turnover of derivative warrants (DWs) and callable bull bear contracts (CBBCs) in the six months to June 30. New listings of CBBCs and DWs was down 25% from the previous year amid 'subdued' market sentiment. In the three months to June 30, a total of 1,985 new CBBCs and 1,045 DWs were issued, raising HK$84,611m and HK$21,652m, respectively
CBBCs and warrants are the preferred tools for directional trade by Hong Kong's retail investors, as they incur no stamp duty, unlike stocks. Similarly, futures and options are also less popular for direction trade, as they are available mostly via margin accounts, which entail a risk level unacceptable to many retail investors.
Click the link to view the full Q2 report by SFC.
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