The delay of the Shanghai-Hong Kong Stock Connect has not had any impact on the capital flow of the Tracker Fund of Hong Kong (TraHK), State Street Global Advisors, manager of the exchange traded fund (ETF), said on Tuesday.
“So far we do not see any obvious [change in the] trend in capital flow because of the short-term delay of the Shanghai-Hong Kong Stock Connect. Overall, the current capital flow on Hong Kong listed ETFs is obviously more abundant than in the first half of the year,” said Ray Chan, State Street Global Advisors’ vice president and head of ETF business development in Asia ex-Japan.
On average, TraHK’s daily trading in the past two months is nearly double the amount in the first of the year, Chan said, adding that net capital inflow was more than US$200 million in October alone.
The Shanghai-Hong Kong Stock Connect is expected to be launched later this year after it was put on hold in October.
Commenting on the ongoing Occupy movement, Chan said the political crisis has had little impact on the company’s business plans, adding that he has not heard any negative feedback from investors.
He also said the Mandatory Provident Fund (MPF) provides a very good long-term development platform for ETFs in Hong Kong, and the coming three to five years may prove to be a golden period for ETFs in the territory.
In fact, MPFs are boosting their investments in ETFs. Three years ago, there was only one MPF product using ETFs, but now there are 11 MPF providers using ETFs with a combined investment of US$300 million. The rising trend is expected to continue, he said.
Chan said State Street Global Advisors may introduce ETFs that invest in renminbi assets in mainland China through the Renminbi Qualified Foreign Institutional Investor scheme next year.
The Hong Kong government launched TraHK in November 1999 to divest itself of a substantial porfolio of Hong Kong shares it acquired to defend the local currency’s dollar peg during the Asian financial crisis.
The growth of exchange traded products is accelerating in the Asia-Pacific region. There are now 655 ETFs in the region representing US$189.1 billion as of June 2014, Chan said.
In Hong Kong, the ETF market has grown to more than US$40.4 billion as of September 2014.
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