ChinaAMC launches 3 Hong Kong ETFs as demand for targeted strategies grows

China Asset Management (HK), a subsidiary of a major Chinese asset manager, unveiled three new exchange-traded funds (ETFs) in Hong Kong on Thursday. The launch aimed to diversify investment options as market volatility heightens investor demand for more targeted strategies.

The three funds – a Hong Kong high-dividend ETF, a Hong Kong growth ETF, and a Hong Kong-US "Halo" ETF – will be listed on the Hong Kong stock exchange on September 30. These ETFs will be available for trading in Hong Kong dollars, yuan, and US dollars, catering to a broader investor base.

Tian Gan, the CEO of ChinaAMC (HK), emphasized during a media briefing that Hong Kong's ETF market is evolving beyond basic market access. Investors are now seeking specialized products that fit specific roles within their portfolios. By offering both Hong Kong-focused and cross-market strategies, these new ETFs reflect Hong Kong's role as a bridge between local and international markets.

The high-dividend ETF targets 50 Hong Kong-listed companies based on factors such as dividend consistency, profitability, and volatility. The index has yielded an annualized dividend rate of approximately 7% over the past year, with the fund promising monthly distributions to shareholders.

The growth ETF, on the other hand, selects 50 Hong Kong-listed companies based on their earnings growth, profitability, and cash generation capabilities across sectors like industrials, healthcare, financials, energy, and consumer businesses.

The third ETF, dubbed Asia's first "Halo" ETF, invests in 60 Hong Kong- and US-listed companies with substantial physical assets and low obsolescence risk. This fund spans sectors like resources, infrastructure, and technology, positioning itself as a unique asset for investors seeking steady returns with low risk of obsolescence.

The launch of these ETFs coincides with Chinese regulators fostering cross-border investments in Hong Kong-listed assets. The National Financial Regulatory Administration (NFRA) has supported mainland insurance funds' participation in ETFs through initiatives like Stock Connect, enabling cross-border trading between mainland China and Hong Kong financial markets.

ChinaAMC (HK) designed the three funds with potential mainland investor participation in mind, aiming for ETF Connect eligibility within six months if they meet the necessary criteria. Despite being developed with mainland investors in consideration, these products are not tailored specifically for mainland insurers, according to the company's CEO.

Gan noted that recent regulatory developments have made cross-border investment in Hong Kong increasingly favorable. He expressed confidence that more mainland institutional and individual investors will engage in the Hong Kong market through compliant channels and cross-border schemes in the coming years.