CICC launches ‘quantamental’ China A-shares ETF in HK

Dec 5th, 2018 | By | Category: Equities

The Hong Kong subsidiary of China International Capital Corporation (CICC) has launched the CICC CSI Select 100 ETF on Hong Kong stock exchange.

Liang Hong, Managing Director and Head of CICC Research Division

Liang Hong, Managing Director and Head of CICC Research Division.

The fund tracks the CSI CICC Select 100 Index a quantitative, fundamentals-oriented strategy index consisting of 100 China A-shares – mainland China domiciled firms listed on the Shanghai and Shenzhen stock exchanges and denominated in renminbi – that are considered industry front-runners with solid competitive advantages.

“CICC is devoted to helping clients with top-notch research capabilities,” said Liang Hong, Managing Director and Head of CICC Research Division. “We are proud to provide this ‘quantamental’ product in the format of an ETF for our clients.”

“We are excited to launch this innovative ETF in Hong Kong,” added Lin Ning, Managing Director of China International Capital Corporation Hong Kong Asset Management. “We are convinced this is the right product for savvy investors to get involved in the Chinese stock market.”

The index is a free float market capitalisation weighted index that seeks to provide exposure to companies with high and stable return on equity (ROE), high dividend yields and high earnings growth rates.

The first stage of the index constituent selection process ranks all A-share stocks in each industry group (according to CSI Industry Classification Standard) by operating revenue, average daily float adjusted market capitalization in the past year, and average daily trading value in the past year in descending order respectively. A combined ranking is calculated for each stock with the bottom ranked 70% of firms within each industry group being deleted.

At the second stage, the standard deviation of ROE is calculated using data for the past five years. The bottom ranked 50% of all the remaining stocks are also stripped out.

Finally, the surviving stocks are ranked through a combination of their average dividend yields over the last five years and their growth rate of net profit. The 100 top ranked stocks are selected for final inclusion.

The fund is available to trade in Hong Kong dollars (Ticker: 3093 HK) and renminbi (83093 HK). It comes with a management fee of 0.68%.

CICC introduced its first ETF on HKEX in April of this year through a partnership with Krane Funds Advisors. The CICC KraneShares CSI China Internet Index ETF (3186 HK) replicates the strategy of KraneShares’ flagship US ETF and provides exposure to Chinese internet companies via the CSI Overseas China Internet Index. It comes with a management fee of 0.72%.

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