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UOB Asset Management has teamed up with its Chinese partner Ping An Fund Management to deploy the first master-feeder exchange-traded fund operating between the Singapore and Shenzhen stock exchanges.
The launch comes amid continued volatility and falling valuations in China’s A-share market this year, due to China’s strict zero-Covid policy and regulatory crackdowns in the technology, electronics, and media sectors. real estate and other sectors.
The Singapore-listed UOBAM Ping An ChiNext ETF powers the Ping An ChiNext ETF, a Shenzhen-listed ETF that tracks the Shenzhen Stock Exchange’s Nasdaq-style ChiNext Index, a compilation of the 100 largest and most popular A-shares. technology liquids. -heavy scholarship generally reserved for Chinese and foreign professional and institutional investors.
There has been no announcement of the availability of corresponding UOBAM ETFs via the Shenzhen Stock Exchange.
The ETF’s IPO will last from October 21 to November 7, and the fund will be listed on the Singapore Stock Exchange on November 14.
The ETF program linking Singapore and Shenzhen was announced last December after the two exchanges signed a memorandum of understanding to develop a nexus that would allow investors from Singapore and China to access feeder ETFs linked to locally listed ETFs on each other’s exchanges.
The initial range of products available under the program is focused on equity ETFs due to higher turnover, rather than fixed income ETFs and real estate investment trusts which account for many of Singapore’s largest ETFs.
Thio Boon Kiat, chief executive of Singapore-based UOBAM Group, said the ETF marked an “important milestone” in its partnership with Chinese joint venture Ping An FM, in which it holds a 17.51% stake.
Last May, two of UOBAM’s China-focused funds were sold in the city-state passed S$1 billion ($703 million) combined assets threshold, which the Singapore manager credited to its partnership with the joint venture.
The new ETF aims to provide investors with access to high growth sectors in China such as biotechnology and clean energy.
The Singapore manager touted the Chinese market’s long-term growth potential, citing the Chinese government’s efforts to develop “new engines of economic growth” through biotechnology, electric vehicles and robotics.
About 40% of its holdings will be in industrials, 22% in healthcare, 14% in information technology and 8% in finance, according to a company statement.
Major holdings include lithium-ion battery maker Contemporary Amperex Technology, financial and stock information provider East Money Information Company and medical device maker Shenzhen Mindray Bio-Medical Electronics.
But Paul Ho, senior director of Asia-Pacific equities at UOBAM, admits China’s slowing economy “continues to worry investors”.
“China’s economy has also been hurt by its zero Covid policy and geopolitical and trade tensions between the United States and China are expected to compound these issues,” he said.
However, Ho argued that China’s stock market was now “attractively priced” and he expected the Chinese government to soon implement policies that would support the economy, such as easing zero measures. -Covid.
“These could be the catalysts needed to boost Singaporean investor interest and confidence,” he added.
The fund is the sixth Singapore-listed ETF to provide access to the Chinese market and follows the launched the NikkoAM-StraitsTrading MSCI China Electric Vehicles and Future Mobility ETF in January this year and the Lion-OCBC Securities China Leaders ETF last August.
ETF assets have grew up fast in Singapore over the past two years, growing by 57% in 2020 and then another 47% in 2021 to reach S$12.55 billion driven by growing retail adoption.
The Singapore Stock Exchange has also been active in building the local ETF space, with the local exchange announces a collaboration with the New York Stock Exchange in July which includes the development of new ETF products.
*Ignites Asia is an information service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.