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Hong Kong's biggest yuan ETF sees strong inflows on China 'A' shares MSCI inclusion
June 27, 2017 / 11:08 AM / 6 months ago

Hong Kong's biggest yuan ETF sees strong inflows on China 'A' shares MSCI inclusion

SHANGHAI, June 27 (Reuters) - Hong Kong’s biggest yuan-denominated exchange-traded fund (ETF) that invests in China’s “A-shares” saw its largest inflow this year on Tuesday following index publisher MSCI’s decision to include mainland stocks in its emerging market benchmark sparked foreign investor interest.

The CSOP FTSE China A50 ETF, which invests in China shares under the so-called RQFII scheme, attracted inflows of roughly 1.5 billion yuan ($220.16 million) on Tuesday from long-only capital and some hot money, fund manager CSOP Asset Management said in a statement.

The RQFII, or RMB Qualified Foreign Institutional Investors scheme, helps channel offshore yuan into China’s stocks and bonds.

“Investors are seeking investment instruments with very good liquidity to play on the inclusion,” CSOP Asset Management Co said, noting also that the FTSE China A 50 Index is highly correlated to MSCI’s A-share inclusion plan.

MSCI said last week that under the plan, it will start including 222 China big-caps into the MSCI Emerging Market Index starting June next year. Of the 222 stocks, the top 30 by market capitalization are covered by its RQFII ETF, CSOP Asset Management said.

Global asset manager Vanguard Group also expressed its optimism toward China assets following the MSCI inclusion.

In June, 2015, Vanguard decided to add China A-shares to its broad emerging markets ETF, and over the past two years, the asset manager has invested over 25 billion yuan into China, with stakes in over 1900 mainland-listed companies, according to Charles Lin, head of Greater China at Vanguard Investments Hong Kong.

“This reflects our long-term confidence, and commitment to the China market,” Lin told a fund conference in China’s eastern city of Hangzhou over the weekend.

$1 = 6.8131 Chinese yuan renminbi Reporting by Samuel Shen and David Stanway; Editing by Vyas Mohan

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