HK-Shanghai ETF dual listing to begin within months
Updated: 2011-05-14 06:51
By Oswald Chen(HK Edition)
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Local and mainland financial officials pledged Friday to work harder and facilitate the dual listing, within the coming months, of both sides' exchange-traded funds (ETFs) in their respective stock markets.
The pledge came at a conference on the development of ETFs and other index products, jointly organized by the Hong Kong Exchanges and Clearing Limited (HKEx) and the Shanghai Stock Exchange (SCE). Local and mainland government officials, stock exchange representatives and financial regulators attended the meeting.
Secretary for Financial Services and the Treasury, K.S. Chan noted that as the two sides have followed up on their Closer Economic Partnership Arrangement, the basic framework for cross-boarder listing of ETFs had been established.
"The HKEx and the SCE will fine-tune the regulatory requirements and will implement the ETF cross-boarder listing as soon as possible," he said.
"The SCE is working to accelerate the pace of cross-boarder ETF listing as the pilot scheme to further enhance cooperation between HKEx and SCE," said SCE President Zhang Yujun, for his part.
The bourses in Hong Kong and Shanghai will further enhance their cooperation in other activities such as initial public offering, Zhang said.
An ETF is an investment fund traded on stock exchanges much like stocks, and can trace the asset price movement of as stocks, commodities, bonds or index and trades close to net asset values over the course of the trading day.
According to the HKEx data, currently there are 76 ETFs listed on the local bourse, accounting for 3.5 percent of total market turnover. In the first quarter of 2011, the market turnover of ETFs has totaled HK$160 billion. For the whole year of 2010, the market turnover of ETF trading has amounted to HK$600 billion.
"HKEx ranks the first in ETF trading in Asia and the eighth in the world as the ETF trading volumes swelled in the last few years," the bourse's chairman Ronald Arculli said.
"I believe ETF trading has vast market potential in the near future as ETF investments become the vital part of investment portfolios by enhancing investors' market exposure to the general economy," he said.
The Shanghai stock market had 15 ETFs listed as of April 2011. The current market turnover from ETF trading has totaled to 700 billion yuan. The SCE has estimated that it could have nearly 100 ETFs listed by 2013.
Talk of cross-boarder listing of local and mainland ETFs gained strength after 2009, when HKEx and Taiwan Stock Exchange signed agreements to do so.
Mainland financial regulators, meanwhile, said the authorities were actively studying the investment channels needed for the mini-Qualified Foreign Institutional Investor (QFII).
"The relevant systems have taken shape. The mainland authorities will introduce the program as soon as possible to let its financial companies in the city start yuan funds that will invest in mainland stocks," said Wang Lin, director-general, Department of Fund Supervision of the China Securities Regulatory Commission.
The mainland allows only approved overseas institutional investors to buy its local-currency stocks and bonds under the QFII program. The combined approved quota is $30 billion. The nation's two exchanges in Shanghai and Shenzhen have a market capitalization of $3.9 trillion, second in the world to the US' $16.6 trillion, according to data compiled by Bloomberg.
The mainland has approved 13 domestic fund-management firms to set up branches in Hong Kong, Wang said. Nine have won asset-management licenses in the city, while three are already managing publicly raised capital, he added.
Hong Kong's Chan said: "The launch of mini-QFII investment channels can help in enhancing further financial cooperation between the city and the mainland, and can further consolidate Hong Kong as the offshore yuan financial centre."
China Daily
(HK Edition 05/14/2011 page2)