The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
ôWe were pleasantly surprised by the activity,ö he says, noting that while India is of obvious interest to Singaporean investors, BGI wasnÆt sure to what extent Hong Kongers would be keen. He notes that most investors are retail.
This represents BGIÆs second international India ETF, following the June listing of the iShares MSCI India fund on the Singapore Stock Exchange. These are the only international ETFs tracking India indices.
India ETFs are difficult to create for international investors, not only because of capital gains issues, but also because stocks in the indices have quotas for foreign investment, several of which have been reached. For both products, ETF relied on Citigroup to structure participatory notes, which the ETFs invest in, rather than creating baskets of shares to reflect the index. Citigroup takes the risk and uses its local market presence to hedge the index.
Ho explains the firm wanted to complement the Singapore-listed MSCI ETF in order to broaden the investor base, both geographically as well as by type of index. The Singapore ETF has grown to $70 million of assets, which is not a large amount, but its trading volume has been big: around 200,000 shares per day on average, at a price fluctuating around $4.0-$4.5.
ôWeÆve had more than 100% turnover in the first three or four months,ö Ho says of the Singapore ETF. ôThe turnover is bigger than the total size of the fund.ö
He attributes this to the timing. The Singapore ETF launched shortly after the Indian market corrected sharply, by 30% over May and June. Investors were wary of entering at that point but have been active traders.
Ho expects the Hong Kong-listed Sensex ETF will become bigger over time, particularly as more investors compare India and ChinaÆs growth stories. He thinks it can reach the same size as the iShares FTSE/Xinhua A50 Tracker, which has grown to more than $1 billion since its launch in late 2004. The China ETF (in which Citigroup also provided p-notes) has traded around 2.2 million shares per day over the past six months. At HK$69 per unit, thatÆs a daily turnover of HK$151.8 million ($19.5 million).
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.