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Study into launch of ETFs

SHANGHAI will explore the introduction of exchange-traded funds to track indexes constituted by Hong Kong-listed stocks as part of the city's efforts to build itself into an international financial center.

The Shanghai Stock Exchange will deepen cooperation with its Hong Kong counterpart to list ETFs of the Hang Seng Index, Hang Seng China Enterprises Index and Hang Seng China-Affiliated Corporation Index on the mainland, according to a guideline issued by the Shanghai government yesterday. But the guideline didn't specify a timetable.

The ETFs, also called index-based products, enable investors to buy or sell shares in an entire benchmark portfolio.

The Shanghai bourse in January signed a closer cooperation agreement with Hong Kong Exchanges and Clearing Ltd in information sharing, product development and personnel training. The two exchanges are also looking at dual-listed ETFs and related derivatives, including A-share related options and futures. The Shanghai bourse tried to launch the ETF based on China's benchmark CSI300 Index, which groups the biggest 300 mainland-traded firms by value, in Hong Kong this year.

The city government also encouraged the Shanghai bourse to list overseas companies and red-chip firms, according to the guideline.

More securities joint ventures will be allowed to trade in A-shares and investment consultation as a trial, and fund joint ventures will be able set up subsidiaries in Shanghai and launch innovative products, the guideline said.

Nearly a dozen overseas companies, including Goldman Sachs and UBS AG, have set up fund management firms on the Chinese mainland while domestic firms, such as China Western Securities Co, also seek to tie up with overseas partners.


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