China’s CSOP Asset Management has published its recap of the 2021 experience for ETPs in Hong Kong.
The firm writes that despite weak Hong Kong equity market performance in 2021, Hong Kong ETP market developed to a new level, with the market size, average daily turnover and net fund inflows growing to the three-year high.
The number of newly listed ETPs in 2021 hit a record high, with most new ETPs being A-share ETPs and thematic ETFs.
Hong Kong equity ETFs and thematic ETFs were the most popular categories in 2021, receiving the largest fund inflows. Fixed-income allocation via ETFs were also growing fast, the firm says and the CSOP Hang Seng Tech Index ETF (3033.HK) received the largest fund flow among all HK listed ETPs.
The firm notes that more cross-border opportunities in the ETP market are emerging, with significant progress in ETF cross listing and the ETF connect scheme in 2021. CSOP actively participated in these projects and writes that it provides high-quality investment tools for both Chinese and overseas investors.
Despite the market cap of the Hong Kong stock market decreasing by 11 per cent in 2021, the market size of Hong Kong ETFs and leveraged and inverse products (L&I) increased by 9 per cent year over year to HKD429 billion in 2021, accounting for 1 per cent of the total market cap of the HK stock market. CSOP reports that the market cap of its own ETPs is also rising, making up 13 per cent of the total Hong Kong market.
As of the end of 2021, the Top five ETP issuers by total AUM in Hong Kong are State Street Global Advisors Asia Limited, Hang Seng Investment Management Limited, BlackRock Asset Management North Asia Limited, CSOP Asset Management Limited and DWS Investment S.A.
ETPs trading became more active and popular in 2021, and the average daily turnover (ADT) in 2021 was HKD7.7 billion, accounting for 5 per cent of turnover of HK stock market. Half of Top 10 ETPs with largest ADT are issued by CSOP.
Hong Kong leveraged and inverse (L&I) product market remains highly concentrated, and CSOP occupies the dominant market share of over 90 per cent, the firm writes.
There are 152 ETPs in Hong Kong market as of the end of 2021. The number of newly listed products in 2021 is 33, increasing from 26 in 2020 to a new record high.
By ETP issuers, CSOP issued 11 products in 2021, the most among peers, accounting for over 30 per cent of new ETP issuance market. The new ETPs in 2021 are mainly A-share ETFs and fixed-income ETFs.
By product types, thematic ETFs and broad-based index ETFs made up half of new ETPs. The fund inflows in 2021 set a new high in recent three years, and positive fund inflows were seen for 10 consecutive months in 2021.
By product type, thematic ETFs were most popular in 2021, especially the China technology theme. CSOP writes that commodity ETPs suffered the largest outflows, mainly contributed by gold ETFs.
In terms of underlying markets, Hong Kong equity ETFs received the largest fund inflows among all ETFs, and fixed-income ETF become more popular allocation tool.
By sectors, technology ETFs occupied the dominant fund inflows in 2021, most of which invest in China technology sectors. Leveraged products had more net fund inflows than inverse products in Hong Kong market last year.
In terms of performance, in 2021, CSOP writes that energy ETFs offered good returns, including crude oil and China new energy equities, while China’s technology stocks and property bond related ETFs staggered.
CSOP writes that in 2021 ETF cross listing made progress. Following the Hong Kong-Shenzhen ETF Cross-listing Scheme in 2020, the first batch of products under Hong Kong-Shanghai ETF Cross-listing Scheme were launched.
The firm also says that ETF connect is on the way. On 24 December 2021, Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange ETF connect (SZSE), Hong Kong Stock Exchange (HKEX), and China Securities Depository and Clearing Corp reached an agreement to include ETFs in stock connect schemes.
CSOP writes that it was the only ETF issuer to participate in both cross-listing schemes. With the capital market opening, CSOP is committed to explore more cross-border opportunities via actively participating in more related schemes.
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