China AM launches China Treasury & Policy Bank Bonds ETF in Hong Kong

Jun 8th, 2018 | By | Category: Fixed Income

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China Asset Management (Hong Kong) has launched the ChinaAMC Bloomberg Barclays China Treasury + Policy Bank Bond Index ETF (2813 HK) on Hong Kong Stock Exchange. The ETF is the first of its kind in Hong Kong to track the targeted performance of China treasury and policy bank bonds.

China AM launches China Treasury and Policy Bank Bonds ETF in Hong Kong

The fund is the first in Hong Kong to offer targeted exposure to China treasury and policy bank bonds.

The fund is linked to the Bloomberg Barclays China Treasury + Policy Bank Index.

The index reflects the performance of fixed rate RMB-denominated treasury bonds and policy bank bonds with a minimum of one year to maturity listed on the China inter-bank bond market. It is a sub-index of the flagship Bloomberg Barclays China Aggregate Index.

According to data from China Central Depository & Clearing, the volume of outstanding China treasury bonds was RMB 12.4 trillion ($1.94tn) at the end of April 2018. Foreign ownership of China treasury bonds reached RMB 780.8 billion ($121.9bn), an increase of more than 84.2% from a year earlier.

Foreign ownership of China treasury bonds increased from 3.9% to 6.3% year on year. Bloomberg recently announced that starting April 2019, it will add Chinese RMB-denominated government and policy bank securities to the Bloomberg Barclays Global Aggregate Index, once several planned operational enhancements are implemented by the People’s Bank of China and Ministry of Finance.

“Following Bloomberg’s announcement in March to add Chinese RMB-denominated government and policy bank securities into the Bloomberg Barclays Global Aggregate Index, we see an increasing appetite from global investors for Chinese bonds,” said Dr. Frank Xiaoling Zhang, CEO of ChinaAMC (HK). “China’s high grade government bonds with the most liquidity and least credit risk make it a primary choice for investors who are taking the first step to investing in China’s bond market. We see emerging opportunities in this market and are pleased to select Bloomberg as the benchmark index provider for our first China fixed income ETF.”

“Treasury and policy bank bonds are the most liquid type of bonds in the China Bond Market,” added Norman Tweeboom, head of portfolio & index sales for Asia-Pacific at Bloomberg. “With the new ETF, global investors now have a new avenue to gain exposure to the world’s third largest single country bond market and a transparent and low cost approach to trade and hunt for yield.”

The ETF trades in Hong Kong dollars but is also available in Chinese renminbi under the ticker 82813 HK. It has a management fee of 0.30% and will distribute income to investors on a quarterly schedule.

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