BOCI-Prudential Asset Management has launched its third exchange-traded fund (ETF) in Hong Kong, the W.I.S.E.-SSE 50 China Tracker, which is scheduled for listing today.
Under the umbrella fund of BOCI-Prudential's World Index Shares ETFs, the W.I.S.E.-SSE 50 seeks to track the performance of the Shanghai Stock Exchange (SSE) 50 Index, which is managed by China Securities Index Company (CSI). The index is made up of the 50 largest constituent A-shares on the Shanghai Stock Exchange, representing around 70% of the total market capitalisation of the SSE, and covers the major sectors.
At present, both mainland and overseas investment funds use the SSE 50 Index as a benchmark for their portfolios. BOCI-Prudential believes that the index will gain more attention in line with the move to integrate the capital markets in China and Hong Kong. The opening up of the A-share market to a wider investor base outside China, through the qualified foreign institutional investor (QFII) scheme is also expected to boost demand for the index.
As of end-March, the top 10 constituents of the SSE 50 Index included China Merchants Bank, Citic Securities, Ping An Insurance, Bank of Communications, China Minsheng Banking, Shanghai Pudong Development Bank, Industrial Bank, China Shenhua Energy, Industrial and Commercial Bank of China, and China Yangtze Power.
The units of W.I.S.E.-SSE 50 were initially offered only to qualified participating dealers last week. The trading board lot size is 100 units with an offer price of HK$18.90 ($2.40) per unit.
BOCI-Prudential Asset Management is the fund manager of W.I.S.E.-SSE 50, BOCI-Prudential Trustee Limited is the trustee and custodian, and KBC Financial Products Trading Hong Kong is the participating dealer. The new fund will not invest directly in A-shares. It will primarily invest in A-share access products (AXPs). Each AXP is a derivative instrument such as a warrant, note or participation certificate that is linked to an A-share or a basket of A-shares but it does not give the fund any right, ownership or interest in the underlying A-shares.
BOCI-Prudential is positioning itself as a specialist in the Greater China ETF market. [Editor's note: Please see "BOCI-Prudential carves Greater China ETF niche" published on March 30, 2009.]
"Our corporate positioning is clear and unique. We are a very serious player in the China equity market and strive to provide innovative investment products that are in line with the market development trend," says Hing Tang, investment director for quants at BOCI-Prudential.
In July 2007, BOCI-Prudential launched the CSI 300 China Tracker, which tracks the performance of the top and most liquid 300 stocks on the Shanghai and Shenzhen exchanges. In May 2008, the fund house launched the CSI HK 100 Tracker, which tracks the performance of the top and most liquid 100 stocks on the Hong Kong exchange. BOCI-Prudential is a joint venture between BOC International Holdings and Prudential Corporation.