ETF offers foreigners access to local stocks
Print Edition
Harvest Global Investments Ltd has launched a US exchange-traded fund that tracks shares on the Chinese mainland, the first-of-its-kind fund offering overseas investors a new way to access the country’s securities market.
Joining with Deutsche Asset & Wealth Management, Harvest started trading the db X-trackers Harvest CSI 300 China A-Share Fund on the New York Stock Exchange on Tuesday, the Hong Kong-based fund manager said in a statement yesterday. Launched with an initial investment of US$108 million, the ETF fund gives access to the 300 largest and most widely traded securities trading on the Shanghai and Shenzhen bourses.
The initial investment is the largest for any EFT since 2007, which is “a positive indicator of pent up demand for direct exposure to mainland Chinese equities,” Martin Kremenstein, head of Passive Asset Management for Deutsche Asset & Wealth Management Americas, said in a separate statement.
“The new ETF provides foreign investors a new channel to tap China’s stock market and is positive for the A-share market,” said Zhang Qi, analyst with Haitong Securities.
Foreign investors were previously only allowed to invest in China’s yuan-denominated shares through Qualified Foreign Institutional Investor and Renminbi Foreign Institutional Investor schemes.
The launch of the ETF marked China’s latest move to offer foreign investors better access to the county’s restricted capital market in a bid to restore confidence in one of the world’s worst performing markets.
The Shanghai-Shenzhen CSI 300 Index has lost more than 30 percent since the beginning of 2010.
However, Zhang said the sluggish index won’t affect the ETF’s attractiveness to foreign investors who tend to take a long-term view.
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