Luster over HK-listed ETF wanes
Print Edition
DOUBTS over a sustained rally in China’s mainland stock market have arisen after offshore investors retreated from Hong Kong-listed exchange-traded funds linked to the performance of mainland shares.
An outflow of US$845 million was seen in the CSOP FTSE China A50 ETF, which tracks an index that covers the 50 largest companies trading on the yuan-denominated A-share market, in the two weeks ending last Friday, the most since the fund was set up in 2012, according to data from Bloomberg News.
Investors also withdrew US$585 million from the iShares FTSE A50 China Index ETF last week, the largest outflow since 2009, Bloomberg data showed.
The massive outflows occurred despite a rebound in A shares.
The Shanghai Composite Index gained 11 percent last month as a stock link allowing mutual access to Shanghai and Hong Kong exchanges finally went live and the Chinese central bank cut interest rates for the first time since July 2012 to bolster economic growth.
“The outflow could indicate that investors are switching their investment channel to the stock connect which enables them to trade more than 500 A shares directly,” Andes Lau, analyst with the Hong Kong-based Prudential Brokerage Ltd, said in an e-mail.
The appetite for A shares seemed to wane as a recent rally in mainland financial shares has eliminated the price discount of A shares to their Hong Kong-listed shares, Lau added.
The Hang Seng China AH Premium Index, which measures the average price gap between the largest dual-listed shares, moved from 89 in July to 112 yesterday — a 12 percent premium of A shares over H shares.
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