SGX lists world’s largest Chinese pure government bond ETF, HSBC takes custody

  • ICBC CSOP FTSE Chinese Government Bond Index ETF will start trading on 21 September
  • CSOP Asset Management’s inaugural ETF on SGX will kick off with US$676 million (RMB 4.6 billion) in assets under management

Singapore Exchange (SGX) announced the listing of the world’s largest Chinese pure government bond exchange-traded fund (ETF) for investors to access opportunities in China’s onshore bond markets. Managed by CSOP Asset Management Limited (CSOP AM), the institutional-grade ETF was developed in partnership with ICBC Wealth Management and ICBC Asset Management (Global) as its investment advisors. The fund replicates the performance of fixed-rate government bonds issued in mainland China as measured by the FTSE Chinese Government Bond Index (CGBI).

The ETF is CSOP Asset Management’s first listing on SGX. Notably, the product is also the first ETF to tap the new Variable Capital Companies (VCC) framework launched by Singapore’s central bank, the Monetary Authority of Singapore (MAS), and Accounting and Corporate Regulatory Authority (ACRA) this year.

The VCC is a new corporate structure for global asset managers seeking to establish new funds or re-domicile their overseas funds in Singapore. The framework covers all traditional and alternative strategies with either open-ended or closed-ended funds. The city-state aims to be a key asset management hub, linking global investors to Asia and its investible asset classes.

The fund garnered resounding investor interest with an initial assets under management (AUM) of $676 million (RMB4.6 billion) at the end of the subscription period, demonstrating robust demand for efficient access to China’s bond markets – the second largest bond market in the world at $15 trillion.

Loh Boon Chye, chief executive officer of SGX, said in a statement, “Global fixed income investors have been turning to Chinese sovereign bonds for added diversification and yields, and this product is a strong addition to our platform. SGX will continue to work with issuers and business partners to develop a multi-asset ETF product shelf that meets the demands of the investment community.”

Gu Jian’gang, chairman of ICBC Wealth Management, said in a statement: “I hope ICBC CSOP FTSE Chinese Government Bond Index ETF listed on SGX will contribute to the internationalization of RMB and the development of Singapore’s offshore RMB market.”

Over the past few years, SGX’s ETF market has grown considerably, with total market turnover value of SGX-listed ETFs reaching S$4.1 billion ($3.0bn) in FY2020, a 70% increase from the preceding year. As at end June 2020, total AUM for all SGX-listed ETFs amounted to S$5.8 billion. The strong growth in SGX’s ETF market reflects the growing adoption of ETF investing. In recent years, there has been growing investor interest towards yield-focused products, such as fixed income and REIT ETFs, which today make up 40% of the ETF assets held on SGX.

In addition, HSBC announced it’s been appointed custodian and fund administrator for the ETF. Gavin Powell, head of Global Markets for HSBC Singapore, said in a statement. “New fund structures like VCC now available in Asia Pacific are putting the spotlight on the region as a viable international investment hub. This strengthens our commitment to the development of the region’s fund management industry,” he added.

Read the full release

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