HSBC launches China A shares ‘inclusion’ ETF on LSE

Jul 31st, 2018 | By | Category: Equities

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HSBC Global Asset Management has launched the HSBC MSCI China A Inclusion UCITS ETF on London Stock Exchange.

hsbc msci china a inclusion index etf

HSBC Global Asset Management has launched a China A share ETF on the London Stock Exchange.

The fund provides investors with a tool to invest in the progressive partial inclusion of China A shares – Renminbi-denominated shares traded on the Shanghai and Shenzhen stock exchanges – in the MSCI Emerging Markets Index over time.

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.

This currently consists of the 226 large-cap China A Shares that have been included in the MSCI EM Index with an inclusion factor of 2.5% on 1 June 2018, increasing to 5% in the second stage of the inclusion process in September.

Joseph Molloy, head of index and systematic equity portfolio management, HSBC Global Asset Management, commented, “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,” said Molloy.

“HSBC is one of the largest foreign financial institutions in China, with a long-standing heritage, strong expertise and an extensive on-the-ground footprint. This leaves HSBC Global Asset Management perfectly placed to help investors access this market,” added Molloy.

Financials account for a third (32.3%) of the total index weight, with the next largest sector exposures split roughly equally between consumer staples (12.8%), industrials (11.9%), and consumer discretionary (10.7%).

The ETF comes with a total expense ratio (TER) of 0.60% and has been listed with US dollar (Ticker: HMCT LN) and pound sterling (Ticker: HMCA LN) share classes. It pays dividends on a quarterly basis.

Further listings are planned across key markets in Europe.

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 $360m in assets under management and also comes with a TER of 0.60%.

It also offers an MSCI EM ETF – the HSBC MSCI Emerging Markets ETF (HMEF LN) – which has approximately $270m in AUM.

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