HSBC has provided onshore Qualified Foreign Institutional Investors (QFII) custody services to enable Daiwa Asset Management (Daiwa AM) to set up two new exchange-traded funds (ETFs) under the China-Japan ETF Connectivity scheme.
The scheme allows international investors to indirectly invest in Chinese assets through feeder ETFs listed on the Tokyo Stock Exchange (TSE), to capture the growth opportunities of Guangdong-Hong Kong-Macau Greater Bay Area (GBA) and China's technology sector.
Daiwa AM iFreeETF China GBA100’s debut in Japan marks the first overseas listed Shenzhen Stock Exchange (SZSE) ETF tracking the SZSE GBA100 Index.
GBA will be a key contributor to China’s economic development as it develops into an international science and technology innovation centre, HSBC explains.
Sophia Chung, head of securities services for HSBC in China, says: “China continues to expedite the two-way opening up of its capital markets to overseas markets, and is steadfastly expanding product types and diversifying cross-border investment options for offshore investors.
According to Chung, with the inception of the new ETFs, including the first overseas-traded STAR50 ETF in Asia and the first overseas-listed SZSE ETF, global investors will have easier access to Shanghai’s Nasdaq-style tech board and the GBA growth story.
Chikako Nagahara, head of markets and securities services for HSBC in Japan, comments: “Japan strengthens its position as an international financial hub, facilitating greater access to China’s markets as Japanese and other global investors can now indirectly invest in Chinese assets through feeder ETFs listed on the Tokyo Stock Exchange to capture opportunities in the GBA and China’s technology sector.”
Nagahara adds: “We believe that this route will also attract new Japanese investors.”
Since the China-Japan ETF Connectivity rolled out in 2019, HSBC has served as the QFII custodian for three of the five Japanese asset managers participating in the scheme.
In January, HSBC facilitated short selling transactions by an offshore investor via the QFII scheme, and prior to this in December, the bank conducted the first onshore private fund investment via the QFII/RQFII scheme in mainland China.
The QFII rules took effect in November 2020. To discover more about this scheme and China’s growth story, go to page 16 in issue 259 of Asset Servicing Times.
