HSBC cross-lists China A shares ‘inclusion’ ETF on Xetra

Oct 18th, 2018 | By | Category: Equities

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HSBC Global Asset Management has cross-listed the HSBC MSCI China A Inclusion UCITS ETF on Deutsche Börse’s Xetra platform and the China Europe International Exchange (CEINEX) in Frankfurt.

 HSBC cross-lists China A shares ‘inclusion’ ETF on Xetra

HSBC Global Asset Management first launched the HSBC MSCI China A Inclusion UCITS ETF on London Stock Exchange in July 2018.

The fund provides investors with a tool to invest in the progressive partial inclusion of China A shares in the MSCI Emerging Markets Index over time.

China A shares are Renminbi-denominated shares traded on the Shanghai and Shenzhen stock exchanges.

The fund is physically replicated and the first its kind in Europe to access China A shares through Stock Connect programmes rather than using the Renminbi Qualified Foreign Institutional Investor (RQFII) quota system.

The underlying reference index is the MSCI China A Inclusion Index.

The index initially consisted of the 226 large-cap China A Shares that were included in the MSCI EM Index with an inclusion factor of 2.5% on 1 June 2018. The number of constituents has since increased to 235 with an inclusion factor weighting in the MSCI EM Index of 5%.

Joseph Molloy, Head of Index and Systematic Equity Portfolio Management, HSBC Global Asset Management, said, “China is now the world’s largest economy in terms of purchasing power and its estimated growth exceeds that of the developing world. The HSBC MSCI China A inclusion UCITS ETF gives foreign investors quick and easy access to mainland Chinese equities through China A shares, which were traditionally only available to mainland citizens.

“As the ETF is designed to track the progressive partial inclusion of China A shares in the MSCI Emerging Markets Index over time, we believe it provides an excellent building block for investors to future-proof their portfolio using one single share.”

Chen Zhiyong, Executive Board Member, Product Development at CEINEX, said, “The inclusion of China A-Shares in global benchmarks is a significant recognition of how open China’s stock markets have become. We are very pleased to have one of the leading international financial institutions – HSBC Global Asset Management – onboard to provide this innovative ETF for global investors to track the inclusion of China A-Shares.”

Financials account for a third (34.1%) of the total index weight, with the next largest sector exposures split roughly equally between industrials (12.1%), consumer staples (12.0%) and consumer discretionary (9.5%).

The ETF comes with a total expense ratio (TER) of 0.60% and has been listed on Xetra in euros (H41K GY). It is also available on LSE in US dollar (HMCT LN) and pound sterling (HMCA LN) share classes. The fund pays out dividends on a quarterly basis.

The ETF complements the asset manager’s existing China product, the HSBC MSCI China UCITS ETF (HMCH LN) which tracks the MSCI China Index. This fund has approximately $300m in assets under management and also comes with a TER of 0.60%.

HSBC also offers an MSCI EM ETF – the HSBC MSCI Emerging Markets ETF (HMEF LN) – which has approximately $240m in AUM.

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