Date
20 October 2017
Wall Street has a new way to tap China's massive but tightly controlled debt market. Photo: Bloomberg
Wall Street has a new way to tap China's massive but tightly controlled debt market. Photo: Bloomberg

China approves New York-listed bond ETF

A planned Chinese exchange-traded fund (ETF) to be listed in New York has won approval from Beijing, giving investors in the United States a new way to tap the mainland’s debt market.

China fund manager E Fund Management Co. plans to run the ETF with US partner KraneShares, the Wall Street Journal reported, citing a person familiar with the situation.

The move is part of measures by Beijing to overhaul its large but tightly controlled capital markets and allow more foreign investors in.

KraneShares E Fund China Commercial Paper ETF has filed registration papers with the US Securities and Exchange Commission. It has received the go-ahead to raise cash and market the fund, the report said.

The proposed rollout of the bond ETF comes after retail investors in the US were granted fresh access to China’s stocks last year when Beijing approved the first US exchange-traded funds that tracks stocks in mainland China.

The prospectus of the bond ETF posted on the website of the US regulator showed that the fund is benchmarked to the ChinaBond Diversified High Grade Commercial Paper Index, a gauge of notes from sovereign, quasi-sovereign and corporate issuers in China.

The index yields 4.6 percent compared with one-year US Treasury bonds that pay barely above zero.

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