development of asian etf market - imas
TRANSCRIPT
Development of Asian ETF Market
July 2015
Material prepared by CSOP Asset Management Limited.
Global Overview â Number of ETFs
Source: AUM â Deutsche Bank, Bloomberg, Reuters, as of 17 Apr 2015
Turnover â World Federation of Exchanges, for the period Mar 2015 YTD
Part 1 Hong Kong ETF Market
Overview â Rank
HKExâs ETF market is now ranked 2nd by AUM and 3rd by turnover in Asia Pacific.
By Asia Pacific ETF AUM By Asia Pacific ETF Turnover
Source: AUM â Deutsche Bank, Bloomberg, Reuters, as of 17 Apr 2015
Turnover â World Federation of Exchanges, for the period Mar 2015 YTD
HKExâs ETF market continued to enjoy strong growth in 2014 and 2015.
Source: HKEx, as of end of Jun 2015
Overview â Turnover Growth
ETF Average Daily Turnover and Number of Listed ETFs at HKEx
Turnover has been dominated by A-share ETFs but HK equity ETFsâ turnover has been
increasing lately.
ETF Average Daily Turnover by ETF Underlying Markets
Source: HKEx, as of end of Apr 2015
Overview â Turnover Breakdown
ETF Products â Managers
25 ETF managers across the globe are attracted to list ETFs in HK, with 130 ETFs issued
Mainland A-Share: 11
CSOP Asset Management 6
BOCI-Prudential Asset Management 5
Ping An of China Asset Management (HK) 4
China Universal Asset Management (HK) 3
E Fund Management (HK) 3
Harvest Global Investments 3
China Asset Management (HK) 2
Bosera Asset Management (International) 1
CICC Hong Kong Asset Management 1
Da Cheng International Asset Management 1
Hai Tong Asset Management (HK) 1
Europe: 3
Deutsche Asset & Wealth Management
Investment S.A. 35
ETF Securities (HK) 3
HSBC Investment Funds (HK) 1
Asia ex-Mainland China: 7
Mirae Asset Global Investments (HK) 11
Enhanced Investment Products 8
Value Partners Hong Kong /
Sensible Asset Management Hong Kong6
Hang Seng Investment Management 5
Samsung Asset Management (HK) 2
Yuanta Securities (HK) 1
Lippo Investments Management 1
North America: 4
BlackRock Asset Management North Asia 15
State Street Global Advisors 4
Vanguard Investments HK 4
BMO Global Asset Management (Asia) 3
Source: HKEx, as of end of Jun 2015
Mainland A-Share: 42
CSI 30
FTSE 4
CES 3
MSCI 2
HSI 1
SZSE 2
ETF Products â Product Range
HKExâs ETF market offers a wide range of investment exposure covering various Equities &
FICC.
Hong Kong Equity: 20
HSI 7
CSI 6
FTSE 3
MSCI 3
NASDAQ 1
Asia Pacific Equity: 43
Regional market 10
Regional sector 6
India 4
Korea 4
Taiwan 4
Indonesia 2
Japan 2
Malaysia 2
Philippines 2
Thailand 2
Bangladesh 1
Greater China 1
Pakistan 1
Singapore 1
Vietnam 1
Other Equity: 10
US 4
Global 3
Brazil 1
Europe 1
Russia 1
Fixed Income & Currency: 9
Mainland China RMB Fixed
Income4
Asian Fixed Income 2
Currency 2
Hong Kong Fixed Income 1
Commodity: 6
Gold 4
Silver & Platinum 2
Source: HKEx, as of end of Jun 2015
ETF Products â Most Actively Traded ETFs
The CSOP A50 ETF (2822) and X ISHARES A50 ETF (2823) are among the most actively
traded stocks on HKEx.
Source: HKEx, as of July 20, 2015
0
2
4
6
8
10
12
7-2 7-3 7-6 7-7 7-8 7-9 7-10 7-13 7-14 7-15 7-16 7-17 7-20 7-21 7-22 7-23
Bill
ion
s H
KD
2822 HK Equity 2823 HK Equity
ETF Products â New Listings
Source: HKEx, as of end of Jun 2015
Mainland China A-shareďź
New Listings:
⢠Value China A-Share ETF (3095/83095)
⢠CSOP SZSE ChiNext ETF (3147/83147)
⢠Harvest CSI Smallcap 500 Index ETF
(3150/83150)
Conversion from Synthetic to Physical:
⢠W.I.S.E. â SSE 50 China Tracker (3024)
Asia Pacific & International Equity
New Listings:
⢠CSOP MSCI T50 ETF (3021)
⢠XIE Shares FTSE Chimerica ETF (3161)
⢠Vanguard S&P 500 Index ETF (3140)
Hong Kong Equity
New Listings:
⢠KODEX HSI Futures ETF (3124)
⢠KODEX HSI Futures RMB FX ETF (3134)
7 ETFs have been newly listed in 2015 YTD
Fixed Income & Currency
New Listings:
⢠CSOP China Ultra Short-Term Bond ETF
(3122/83122)
ETF Products â RQFII A-Share
Source: Bloomberg, as of end of Mar 2015
Hong Kong dominates the China RQFII ETF market globally by number, turnover and MC
RQFII A-Share ETFs in Hong Kong, US and Europe
Number 2015 YTD Turnover Market Capitalisation
ETF Derivatives â on A-Share ETFs
HKEx provides various complementary products on ETFs
ETFsStock
Options
Stock
Futures
Derivative
WarrantsCBBCs
FTSE
A50
⢠CSOP FTSE China A50
(2822/82822)
⢠iShares FTSE A50 China
(2823)
⢠Bosera FTSE China A50
Index ETF (2832/82832)
â
(SO on
2822 &
2823)
â
(SF on
2822 &
2823)
â
(on 2822,
82822 &
2823)
â
(on 2822 &
2823)
CSI
300
⢠W.I.S.E â CSI 300 (2827)
⢠ChinaAMC CSI 300
(3188/83188)
â
(SO on
2827,
3188)
â
(SF on
3188)
â
(on 3188)
â
(on 3188)
CES
120
⢠E-Fund CES 120
(3120/83120)
â
(IF)
ETF Derivatives â on HK Equity & FICC ETFs
HKEx provides various complementary products on ETFs
ETFsStock
Options
Stock
Futures
Derivative
WarrantsCBBCs
HSI
⢠Tracker Fund of Hong
Kong (2800)
⢠Hang Seng Index ETF
⢠(2833)
⢠KODEX HSI Futures (3124)
⢠KODEX HSI Futures RMB
FX (3134)
â
(IO, Mini IO,
SO on
2800)
â
(IF, Mini IF)
â
(on HSI,
2800)
â
(on HSI,
2800)
HSCEI⢠Hang Seng H-Share Index
(2828)
â
(IO, SO on
2828)
â
(IF, Mini IF)
â
(on HSCEI,
2828)
â
(on HSCEI,
2828)
Gold
⢠ETFS Physical Gold (2830)
⢠SPDR Gold Trust (2840)
⢠Value Gold (3081/83081)
⢠Hang Seng RMB Gold
(83168)
â
(on 2840)
Retail Investors â Growth in Participation Rate
31% of stock investors (i.e. 11% of HK adult population) invested in ETFs in 2014 vs 21% in 2011
% of Stock Investors by Type
Source: HKEx Retail Investor Survey 2014
Retail Investors â Trading Pattern
On average, ETF investors had more frequent transactions than equity investors
Average No. of Transactions
in the Past 12 Months
Average Transaction Value
Source: HKEx Retail Investor Survey 2014
Equity
Investors
Warrant
Investors
CBBC
InvestorsETF Investors
Age 47 47 35 50
Education
background
Tertiary or
above
Tertiary or
above
Tertiary or
above
Tertiary or
above
Monthly personal
income~$22,500 ~$22,500 ~$35,000 ~$22,500
Monthly household
income~$45,000 ~$45,000 ~$75,000 ~$45,000
ETF Retail Investors â Profile
Source: HKEx Retail Investor Survey 2014
Other Key Features
⢠HKEx is the bridge between China and global markets â both strength and weakness
⢠HKEx provides various complementary products on ETFs, including warrant, CBBC,
stock option and futures, which help the development of ETFs.
⢠The Dual Counter system (RMB and HKD) of some RQFII ETFs increases the trading
volume in the secondary market, and the potential Triple Counter system (with USD) will
make it more interesting for global investors to trade.
⢠Leveraged and Inverse ETFs launched Taiwan in 2014. What about Hong Kong?
⢠The CES China 120 index futures contract is a total solution to China investment. It is
based on an underlying index that tracks both Chinaâs A-shares and China stocks listed in
Hong Kong. New ETF products will be based on this index.
⢠Developments to make ETF listing process more efficient.
Part 2 Taiwan ETF Market
Overview â Rank
TWSEâs ETF market is now ranked 6th by AUM and by turnover in Asia Pacific.
By Asia Pacific ETF AUM By Asia Pacific ETF Turnover
Source: AUM â Deutsche Bank, Bloomberg, Reuters, as of 17 Apr 2015
Turnover â World Federation of Exchanges, for the period Mar 2015 YTD
69(18%)
46(20%)
Overview â Growth
Source: TWSE, as of 23 July 2015
The average daily turnover of TWSEâs ETFs is increasing rapidly from 2013. Taking into
consideration of the exchange rate, the average daily turnover of TWSEâs ETFs in 2014 is
less than 10% of HKExâs (4,727 million HKD).
137
317 322 303
508
932
788 795
1,461
1,077 1,148
1,747
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Average Daily Turnover (NT$ million)
ETF Products â Product Range
Source: TWSE, as of 23 July 2015
TWSE has included leverage & inverse ETFs, which havenât appeared in Hong Kong market.
âOffshore ETFâ is
launched by an
offshore asset
management firm
and cross-listed on
TWSE.
âFeeder Fund ETFâ
is launched by a
domestic securities
investment trust
enterprise and linked
to an offshore ETF.
ETF Products â Product Range (Cont.)
Source: TWSE, as of 23 July 2015
There are 28 ETFs in total listed on TWSE (vs 130 in Hong Kong).
Domestic ETF: 12
Yuanta/P-shares Taiwan Top 50 ETF
Yuanta/P-shares Taiwan Mid-Cap 100 ETF
Fubon Taiwan Technology Tracker Fund
Yuanta/P-shares Taiwan Electronics Tech ETF
Yuanta/P-shares S&P Custom China Play 50ETF
Yuanta/P-shares MSCI Taiwan Financials ETF
Yuanta/P-shares Taiwan Dividend Plus ETF
Fubon MSCIÂŽ Taiwan ETF
Fubon Taiwan Eight Industries ETF
Fubon Taiwan Finance ETF
Yuanta/P-shares TWSE Taiwan NonďźTech50 ETF
Yuanta/ P-shares MSCI Taiwan ETF
Sinopac TAIEX ETF
Fubon FTSE TWSE Taiwan 50 ETF
ETF comprising foreign securities: 6
Fubon SSE180 ETF (FB SSE180)
Yuanta/P-shares SSE50 ETF
Fuh Hwa CSI300 A Shares ETF (FH CSI300)
W.I.S.E. Yuanta/P-shares CSI 300 ETF
Cathay FTSE China A50 ETF
Fubon SZSE 100 Index ETF
Leveraged & Inverse ETF: 6 (3 pairs)
Yuanta Daily Taiwan 50 Bull 2X ETF
Yuanta Daily Taiwan 50 Bear -1X ETF
Fubon SSE180 Leveraged 2X Index ETF
Fubon SSE180 Inversed Index ETF
Yuanta Daily CSI300 Bull 2X ETF
Yuanta Daily CSI 300 Bear -1X ETF
Offshore ETF: 3
Hang Seng H-Share Index ETF(HSHETF)
Hang Seng Index ETF (HSIETF)
W.I.S.E.-SSE 50 China TrackerÂŽ
Hang Seng H-Share Index ETF(HSHETF)
Hang Seng Index ETF (HSIETF)
W.I.S.E.-SSE 50 China TrackerÂŽ
Offshore ETF: 1
Yuanta S&P GSCI Gold ERFutures ETF
Key Developments â LP Program
Although Taiwanâs ETF market formally began in 2003, only a small portion of ETFs have
any significant trading value. Thus, Liquidity Provider Program was launched in 2008 and
2014 to encourage liquidity.
2008 Liquidity Provider Program
⢠ETF issuers (SITEs) could designate up to three LPs per ETF.
⢠Subject to certain performance criteria, LPs could receive rebates and monetary rewards from TWSE.
2014 Liquidity Provider Program
⢠Minimum of one Liquidity Provider (Securities Firm) per designated ETF.
⢠Predefined quoting obligations.
⢠A monetary award is given to the top three liquidity providers for meeting predefined criteria for their
designated ETFs.
Source: TWSE, as of 23 July 2015
Key Developments â L&I ETF
Source: TWSE, as of 23 July 2015
Since the inception of the ETF market in Taiwan, ETF trading value as a proportion of total
trading value on the centralized market has increased to 1.2% as of August 2014 from 0.17%
in 2003.
⢠After launching inverse and leveraged ETFs in 2009 and 2010 respectively, Korea market saw ETF
trading value as a proportion of total trading value on the centralized market shoot to 7.1% in 2011 from
2% in 2010.
⢠In Japan, the launch of leveraged and inverse ETFs in 2012 brought ETF trading value as a proportion
of total trading value on Japan market up by five times to 3.64% in 2013 from 0.69% in 2012.
Learning from the Korea and Japan market experience, TWSE introduced Leveraged &
Inverse ETFs to its markets in 2014.
Key Developments â Other Developments
Source: TWSE, as of 23 July 2015
In April 2015, the TWSE unveiled its first futures-based ETF, which tracks the prices of gold
futures. Hong Kong also launched its first futures-based ETF, tracking Hong Kong underlyings
this year.
The TWSE has also established the multi-currency trading mechanism, through which ETFs
can amass funds in Taiwan Dollars while being listed and traded in more than one currency.
Part 3 Korean ETF Market
Overview â Rank
KRXâs ETF market is now ranked 4th by AUM and 5th by turnover in Asia Pacific.
By Asia Pacific ETF AUM By Asia Pacific ETF Turnover
Source: AUM â Deutsche Bank, Bloomberg, Reuters, as of 17 Apr 2015
Turnover â World Federation of Exchanges, for the period Mar 2015 YTD
69(18%)
46(20%)
36(10%)
Overview â Growth
Source: KRX, as of 23 July 2015
KRXâs daily average trading value and market capitalization of ETFs have increased quickly
since inception. The average daily turnover of KRXâs ETFs in 2014 is approximately the
same as HKExâs, but HKExâs ETF market is growing to more than twice of KRXâs this year.
0
5000
10000
15000
20000
25000
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Trading Value (Left, KRW billion) Market Capitalization (Right, KRW billion)
This chart shows the daily
average levels of Trading
Value and Market Cap.
ETF Products â Product Range
Source: KRX, as of 23 July 2015
KRXâs ETF market offers a wide range of investment exposure.
ETFs(148)
Fixed Income (19)
Currency (2)
Commodity (9)
Inverse/Leverage (9)
Real Estate (2)
Equity (107)
Market Rep. (23)
Theme (34)
Style (3)
Sector (33)
Foreign Stock (14)
Overview â Growth
Source: KRX, as of 23 July 2015
The largest ETFs listed on KRX are equity ETFs tracking KOSPI 200.
Rank Code Name Underlying Index ProviderAUM
(billion KRW)
1 A069500 KODEX 200 KOSPI 200 Samsung Asset 4,362.3
2 A122630 KODEX Leverage KOSPI 200 Samsung Asset 2,268.1
3 A102110 TIGER 200 KOSPI 200 Mirae Asset 1,575.4
4 A153130 KODEX KRW CASH KRW Cash Index (Total Return) Samsung Asset 1,001.8
5 A105190 KINDEX 200 KOSPI 200 Korea Investment 842.2
6 A102780 KODEX Samsung Samsung Group Samsung Asset 778.7
7 A152870 Power K200 KOSPI 200 Kyobo AXA 678.6
8 A114800 KODEX Inverse F-KOSPI 200 Samsung Asset 504.8
9 A157450TIGER MONEY
MARKETKIS MSB 3M(Total Return) Mirae Asset 370.5
10 A152100 ARIRANG 200 KOSPI 200 Hanwha 353.8
Part 4 Japan and Singapore ETF Market
Overview â Rank
By Asia Pacific ETF AUM By Asia Pacific ETF Turnover
Source: AUM â Deutsche Bank, Bloomberg, Reuters, as of 17 Apr 2015
Turnover â World Federation of Exchanges, for the period Mar 2015 YTD
69(18%)
46(20%)
Overview
⢠As the largest ETF market in the Asia Pacific area, JPXâs ETF AUM and turnover are
more than 140% of HKExâs AUM and turnover.
⢠Comparing to other markets, trading volumes of ETFs on Singapore market are relatively
stable these years. And its market size is even less than Taiwan market. The AUM and
turnover are all less than 10% of the HK market.
Monthly Volume & Turnover of SGXâs ETFs
Source: SGX, as of 24 July 2015
Features and Developments
⢠Japanese ETF market is a well developed market which includes different types of ETFs,
such as leveraged and inverse ETFs, JDR structures, thematic ETFs, ETNs, REITs, bond
ETFs, enhanced (risk control, covered calls etc.)
⢠Singapore regulators had changed the rule in April to made more ETFs accessible to
retail investors. SGX data shows that the most actively traded ETFs include ETFs that
give investors access to popular markets such as Shanghai and Mumbai
⢠In the future, the ETFs in these mature markets will probably turn to the investment in
emerging markets, and more innovative ETF products may appear.
Contact Information
Melody He, Head of Capital Markets, CSOP Asset Management
Phone: +852 34065635
Email: [email protected]
Web-address: www.csopasset.com