ETF innovation steps up on Taiwanese Stock Exchange

Sep 7th, 2015 | By | Category: ETF and Index News

Three innovative exchange-traded funds are being launched this week in Taiwan, one tracking the return on oil futures and two offering either a leveraged or inverse return on the Japanese TOPIX. These ETFs are a first for the Taiwanese Stock Exchange.

Taiwan enhances internationalisation of its capital markets through new ETF offerings

ETF innovation in Taiwan has stepped up with the launch of oil and short and leveraged ETFs.

Yuanta Securities, a subsidiary of Yuanta Financial, a Taiwanese financial institution, is behind the oil ETF listing, while Fubon Asset Management, part of Fubon Financial, Taiwan’s second largest financial institution, is sponsoring the short & leveraged ETFs.

The Yuanta S&P GSCI Oil ER ETF tracks the performance of the S&P GSCI Crude Oil Enhanced Excess Return Index, covering oil futures contracts listed on the New York Mercantile Exchange.

Previously, only Japan and South Korea in the Asia-Pacific region had ETFs tracking oil contracts, highlighting the continued innovation and growth of the Asian-Pacific ETF market.

The Fubon Topix Leveraged 2X Index ETF and Fubon Topix Inverse -1X Index ETF allow investors to make geared or short bets on the performance of one of Japan’s best-known indices.

“The TOPIX – Tokyo Stock Price Index – is one of the major indexes on the Tokyo Stock Exchange, with more than 1,800 constituents, and it has become a barometer of the development of Japan’s capital market,” notes the Taiwanese Stock Exchange.

This is one of the major developments of a memorandum of agreement between Taiwan and Japan, signed in 2006, which sought to facilitate integration of their capital markets and enhance transparency for investors on both sides. As a further part of the agreement, the Osaka Exchange is due to issue futures products that will tracks the Taiex, the Taiwanese capitalisation-weighted stock index. These products are due to launch in mid-2016.

ETFs in Taiwan recorded a total of $5.71bn in assets under management as of the end of June, according to the Taiwan-based Securities Investment Trust & Consulting Association.

Speaking in early August, Shin-chung Chen, senior vice president of the corporate planning & strategy department with the Taiwan Stock Exchange commented on the fast growth of the ETF market in Taiwan after the regulatory authority loosened key restrictions last year: “Shortly after Yuanta’s Taiwan leveraged and inverse ETF was launched, another ETF provider, Fubon Asset Management, released their first A-share leveraged and inverse ETFs.

“This trend appears to have carried through into 2015 with a growing number of exotic ETFs, such as the CSI300 Index tracking leveraged and inverse ETFs and gold futures ETF, coming on line in the first half. Also, the first oil futures ETF is expected on the market later in the year.

“We do not rule out the possibility of other exotic ETF products, such as agricultural product- and ore product-linked ETFs going forward, assuming the market demand is there.”

Tags: , , , , , , , ,

Leave a Comment