Lion Global Investors has partnered with local brokerage OCBC Securities to launch a new ETF in Singapore targeting the largest companies listed in mainland China and Hong Kong.
The ETF provides exposure to the largest companies listed in mainland China and Hong Kong.
The Lion-OCBC Securities China Leaders ETF has been listed on Singapore Exchange in Singapore dollars (YYY SP) and Chinese renminbi (YYR SP).
While the global economy has been heavily impacted by the ongoing Covid-19 pandemic, China was the only major economy in the world to record positive GDP growth last year.
Based on estimates from the International Monetary Fund, China’s economy is expected to grow by 8.4% in 2021 and 5.6% in 2022, notably higher than the projected global growth rates of 6% and 4.4% over the same period. The IMF believes that China is poised to overtake the US as the world’s largest economy in 2028.
China’s equity market, meanwhile, is already the second-largest in the world and, for the first time in 2020, there are more Fortune 500 companies based in China and Hong Kong (124 in total) than in the US (121).
China’s equity market has, however, been historically difficult for international investors to access and Chinese A-shares are consequently vastly underrepresented in global indices – while the US has a weight of 57.3% in the MSCI All Country World Index, China accounts for just 5.2%.
Gerard Lee, CEO of Lion Global Investors, commented: “The merits of investing in China are beyond doubt, made more so by geopolitical events of the last few years. As a result, investors now have a much better understanding of what leading Chinese companies can offer owing to extensive coverage by the media. We are confident that the forthcoming Lion-OCBC Securities China Leaders ETF will be warmly received.”
Wilson He, Managing Director of OCBC Securities, added: “In today’s world, we cannot deny the decisive role China plays in the global economy and in re-shaping the business landscape. The way China influences the global economy is multi-faceted and China’s rise provides a good opportunity for customers to ride this wave of growth. We are confident that the Lion-OCBC Securities China Leaders ETF will be an attractive proposition to those who are looking to diversify their portfolio to include China stocks.”
Methodology
The fund is linked to the Hang Seng Stock Connect China 80 Index which consists of the 80 largest stocks listed across the Shanghai, Shenzhen, and Hong Kong stock exchanges.
Securities are only eligible for inclusion if they are available to trade on the Northbound or Southbound channels of the China-Hong Kong Stock Connect programme.
Constituents are weighted by float-adjusted market capitalization subject to caps of 8% and 40% on any company and industry, respectively. The index is reconstituted and rebalanced on a quarterly basis.
The ETF comes with a management fee of 0.45%, while its expense ratio will be capped at 0.62%.