Hong Kong launches 4-year euro digital green bond, term sheet shows

Eight exchange-traded funds (ETFs) focused on South Korean chipmakers, US technology companies, and Malaysian large-cap stocks debuted in Hong Kong on September 28, capitalizing on demand from Chinese insurers seeking global market exposure. Beijing expanded channels for mainland investors to access foreign assets in August, enabling insurers to invest in Hong Kong-listed ETFs through the Southbound Stock Connect scheme.

The scheme went into effect on September 21. Hong Kong's Securities and Futures Commission permits asset managers to launch qualified ETFs to attract potential capital inflows from mainland insurance funds. Analysts estimate that a 1% allocation from insurers to such instruments could bring in over 400 billion yuan (US$59.6 billion) of fresh capital.

To qualify for sale to mainland investors, Hong Kong-listed ETFs must hold at least 60% exposure to Hong Kong equities. Most of the newly-listed ETFs invest in both Hong Kong and overseas markets, including indices tracking HKEX's cross-market, Bursa Malaysia Large Cap, KRX Semiconductor, and Tech & US Tech 100. Despite fierce competition and relatively high exposure to Hong Kong markets, actual demand for the newly-listed ETFs remains to be seen.