Lyxor cross-lists China A-shares ETF on Xetra

May 30th, 2019 | By | Category: Equities

Lyxor has cross-listed the Lyxor Hwabao WP MSCI China A (DR) UCITS ETF onto Deutsche Börse’s Xetra platform.

Lyxor cross-lists China A-Shares ETF on Xetra

MSCI is planning to increase the weight of Chinese A-Shares in its China and emerging market indices to a 20% inclusion factor by the end of November 2019.

The fund provides physical exposure to China A-share companies – firms domiciled in China, and listed in renminbi on either the Shanghai or Shenzhen stock exchanges – via the MSCI China A Index.

The index captures large- and mid-cap China A-shares representation and is designed with international investors in mind by only including securities that are accessible through the China-Hong Kong Stock Connect program.

The index currently contains 387 constituents.

Stocks from the financials sector hold the largest index weight at 30.2%, followed by consumer staples (13.7%), industrials (13.0%), and information technology (8.4%).

The fund has been tracking the index since 22 March 2019 when it switched over from the MSCI China A Onshore Index. At this time, the fund was also renamed to reflect the name change its sub-adviser, Fortune SG Asset Management to Hwabao WP Asset Management.

The previous index, with 541 constituents, covered the entire large- and mid-cap China A-Share universe, regardless of whether the firms were part of the Stock Connect program.

Lyxor’s motivation for updating the underlying index was to align the fund more closely with MSCI’s decision to increase the weight of Chinese A-shares in its China and emerging market benchmarks.

MSCI increased the weight of Chinese A-shares in these indices from a 5% to 10% inclusion factor on 28 May as the first part of a three-step process which will ultimately see the inclusion factor reach 20% by November.

Commenting on the index change, Lyxor said in a statement: “We believe this is the best reflection of how the future China A-shares building block will look post-November 2019.

“Our chosen index will account for all of the inclusions immediately, so it should benefit from the expected inflows into A shares in the lead up to November. Our ETF will be the first in the market to already include mid-cap A Shares, and will be the most representative of the full opportunity set.

The fund comes with an ongoing charges figure (OCF) of 0.35% and houses approximately $50 million in assets under management.

The new Xetra-listed share class trades in euros under the ticker CNAA GY.

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