Greater China ETF set to grow on investor acceptance, survey reveals
04 May 2018 Hong Kong
Image: Shutterstock
Brown Brothers Harriman (BBH) revealed exchange-traded funds (ETF) assets under management is set to grow on investor acceptance, pent-up demand, according to the results of its inaugural Greater China ETFs.
BBH released the results, which highlights that the potential inclusion of ETFs in China-Hong Kong Stock Connect would likely unleash demand for Hong Kong ETFs from Mainland Chinese investors.
The survey also revealed environmental, social and governance (ESG) is increasing in importance, Smart Beta demand is accelerating, and investors want more education.
Just under half, 48 percent in the mainland, 60 percent in Hong Kong, and 75 percent in Taiwan said in the survey that they consider ESG factors “very important” to their investment decisions.
The survey revealed that nearly 90 percent of mainland investors would likely invest in ETFs through the Stock Connect programme.
This allows international investors to trade securities listed on the Shanghai and Shenzhen exchanges, and mainland investors to trade securities listed on the Hong Kong exchange.
The results also indicated strong ETF investment growth across Greater China this year and an uptick in investor demand for products with diversified exposure.
Additionally, 43 percent of mainland investors plan to increase ETF holdings, 65 percent of investors surveyed in Hong Kong and Taiwan are looking to increase their ETF exposure, the survey revealed.
Chris Pigott, BBH’s head of Hong Kong ETF Servicing, said: “Regulatory reform has helped spur the growth of ETFs in the US and Europe. The inclusion of ETFs in Stock Connect will open another cross-border channel for mainland investors to deploy their capital and further diversify their investment outside the mainland.”
Pigott added: “Some investors are put off by low trading volumes. Liquidity continues to be an area of focus for investors as some products in Greater China don’t have heavy volumes and a number don’t trade significantly on a daily basis, but the underlying assets they are invested in are liquid. Education could be a key to unlocking future growth.”
BBH released the results, which highlights that the potential inclusion of ETFs in China-Hong Kong Stock Connect would likely unleash demand for Hong Kong ETFs from Mainland Chinese investors.
The survey also revealed environmental, social and governance (ESG) is increasing in importance, Smart Beta demand is accelerating, and investors want more education.
Just under half, 48 percent in the mainland, 60 percent in Hong Kong, and 75 percent in Taiwan said in the survey that they consider ESG factors “very important” to their investment decisions.
The survey revealed that nearly 90 percent of mainland investors would likely invest in ETFs through the Stock Connect programme.
This allows international investors to trade securities listed on the Shanghai and Shenzhen exchanges, and mainland investors to trade securities listed on the Hong Kong exchange.
The results also indicated strong ETF investment growth across Greater China this year and an uptick in investor demand for products with diversified exposure.
Additionally, 43 percent of mainland investors plan to increase ETF holdings, 65 percent of investors surveyed in Hong Kong and Taiwan are looking to increase their ETF exposure, the survey revealed.
Chris Pigott, BBH’s head of Hong Kong ETF Servicing, said: “Regulatory reform has helped spur the growth of ETFs in the US and Europe. The inclusion of ETFs in Stock Connect will open another cross-border channel for mainland investors to deploy their capital and further diversify their investment outside the mainland.”
Pigott added: “Some investors are put off by low trading volumes. Liquidity continues to be an area of focus for investors as some products in Greater China don’t have heavy volumes and a number don’t trade significantly on a daily basis, but the underlying assets they are invested in are liquid. Education could be a key to unlocking future growth.”
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