What new opportunities will the "official opening" of the two-month ETF interconnection bring?

　　Zhongxin Finance, September 5th: What new opportunities will the "official opening" of the two-month ETF interconnection bring?

　　China-Singapore Finance and Economics reporter Pang Wuji

　　On the 5th, two months after the launch of the ETF Interconnection between the Mainland and Hong Kong markets (ETF Connect), a number of industry experts discussed the opportunities and future development trends brought by ETFs in a webinar.

　　ETF Link was officially launched on July 4, 2022. At present, there are 87 products included in the first batch of ETF Link, including 83 northbound and 4 southbound products.

　　Wang Guobei, Managing Partner of KPMG China Securities and Fund Industry, said here that the inclusion of ETFs is undoubtedly another landmark event for the capital market to accelerate high-level two-way opening, deepen interconnection, and optimize the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism. further development has multiple implications.

Recently, the China Securities Regulatory Commission also announced arrangements for further expansion of interconnection.

The interconnection of ETFs can not only promote the high-quality development of the ETF markets in the two places, but also further enhance the influence of Chinese fund companies in the international market.

　　Li Yingwen, Assistant Vice President of the Market Division of the Hong Kong Stock Exchange, introduced in detail the inclusion of ETFs in the Shanghai-Shenzhen-Hong Kong Stock Connect and Hong Kong ETP markets.

In the past decade or so, the Hong Kong ETP market has flourished, and various themed products have become more and more abundant.

At present, the listing of Hong Kong Stock Exchange includes smart beta, active, leveraged and inverse, ESG, iron ore, carbon futures, currency market and other ETP products, and its diversification is in a leading position in the global market.

The official inclusion of ETFs into eligible securities for Shanghai-Shenzhen-Hong Kong Stock Connect will help promote the long-term and healthy development of the ETF markets in Hong Kong and the Mainland, and bring more investment opportunities to investors.

　　Xu Meng, Executive General Manager of China Asset Management, and Wang Yi, Head of the Quantitative Investment Department of CSOP, respectively introduced the ETF markets of the two places and the first batch of ETF Connect products, and made a detailed interpretation of the trading situation in the first two months.

　　Xu Meng believes that with a large number of domestic ETFs and good liquidity, they can provide investors with a wealth of asset allocation tools for Lu-Share Connect.

China Asset Management is included in 10 funds including the SSE 50 ETF, the New Energy Vehicle ETF, and the Chuang Growth ETF.

China AMC's Science and Technology Innovation 50ETF and Shuangchuang Fund ETF may be included in the next adjustment of the interconnection target.

Wang Yi believes that there are currently only 4 broad-based index ETFs in Southbound products, and the Hang Seng Technology Index ETF of CSOP has the highest inflow amount.

However, there are many other types of ETPs in Hong Kong stocks, such as leveraged inverse, actively managed ETFs, etc., which have not yet been included in the investment scope of ETF interoperability.

It is expected that ETF interoperability can be incorporated into more ETF products in Hong Kong in the future, so as to achieve mutual benefit and win-win under ETF interoperability.

　　Cheng Jianming, director of KPMG China Asset Management, mentioned that ETFs are the most transparent fund category, and important information and document libraries can be obtained from the ETF manager's website.

The disclosures of fee rates, past performance, and tracking errors for both ETFs are fairly comprehensive, but there are slight differences in the way they are disclosed.

It is very important for investors to fully understand the information disclosure of ETFs in the two places for the long-term and healthy development of ETF.

　　Many guests believe that the ETF mechanism is beneficial to top fund managers and top products.

The opening of ETFs can also enhance the competitiveness of the two markets at the same time, and do better in product innovation, publicity and investor education.

With the steady development and further opening of ETF Connect, ETF Connect is expected to incorporate more diversified targets, bring more opportunities to the two markets, and also boost the opening and prosperity of China's capital market.

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