Foreign capital increases investment in China’s ETF market and continues to rush for new products

Securities Times reporter Wang Xiaoqian

Foreign institutions are continuing to increase their investment in China’s ETF market. This year, in the turbulent equity market, ETFs have gained a lot. As of November 17, a total of 15 ETFs had annual returns of more than 20%, of which 7 ETFs had annual returns of more than 40%. Leading products include Nasdaq 100 ETF, animation and game ETF, media ETF, etc. Foreign capital is commonly seen in these ETFs.

Since the second half of the year, foreign institutions such as Allianz Life Insurance, UBS Group AG, and Barclays Bank have continued to increase their investment in ETFs. In terms of historical positions, Barclays Bank has performed particularly well, holding positions in multiple ETF products. Other foreign institutions actively participating in ETF investment include HSBC, Morgan Stanley International, Merrill Lynch International, Nomura, etc. The participation of these institutions not only proves the attractiveness of the ETF market, but also demonstrates the confidence and long-term investment strategy of foreign investors in China’s capital market.

Foreign capital frequently seizes high-quality ETFs

Recently, the strategic layout of foreign-funded institutions in the field of ETF has shown results, and many foreign-owned ETF products have achieved annual returns of more than 20%.

Data shows that the China Nasdaq 100 ETF led similar products with a 50.7% increase in income during the year, ranking first in the overall ETF income. As of the end of the second quarter, the largest holder of the China Nasdaq 100 ETF was the foreign-owned Barclays Bank, with a share of approximately 113 million shares and a holding ratio of 7.84%. Huaan Nasdaq 100 ETF, which followed closely behind, also performed well, with a gain of 48.52% during the year. Barclays Bank also ranked as the third largest shareholder of the ETF with a ratio of 3.18%, holding approximately 135 million shares at the end of the period.

The third-largest gainer, GF Nasdaq 100 ETF, gained 47.77% during the year. The semi-annual report shows that Barclays Bank and Merrill Lynch International ranked the second and third largest shareholders with shareholding ratios of 5.56% and 3.04% respectively, with holding shares of 1.128 billion and 618 million shares respectively. HSBC also has a 1.68% share.

Not only that, several other ETFs with top gains also include foreign institutions. Among holders of the Cathay Nasdaq 100 ETF, Barclays ranks first with a shareholding ratio of 4.85%. As a holder of the China-Korea Semiconductor ETF of Huatai-Berry China Securities and Korea Exchange, Barclays holds a shareholding ratio of 10.32%, and RQFII Jane Street Hong Kong holds a shareholding ratio of 4.98%.

In addition, Nomura Singapore’s own funds hold 3.29% of the China AMC S&P 500 ETF; Morgan Stanley International and Barclays hold 17.76% and 2.04% of the Cathay S&P 500 ETF respectively.

Continue to raise funds for new products

Data shows that foreign-funded institutions took active actions in China’s ETF market in the second half of the year. In recent months, newly issued ETF products have attracted investment from many top international institutions.

For example, in the E Fund Shanghai Science and Technology Innovation Board 100 ETF established on November 8, wholly foreign-owned Allianz Life Insurance holds 5.44 million shares, becoming the largest holder with a holding ratio of 1.21%.

In addition, the ChinaAMC Hong Kong Stock Connect Mainland Financial ETF, established on September 25, has also attracted the attention of UBS Group AG and Barclays Bank. UBS holds 20 million shares, with a holding ratio of 34.52%; Barclays holds 10 million shares, with a holding ratio of 17.26%. The two institutions occupy two of the top three holders.

On September 7, the Bosera Shanghai Science and Technology Innovation Board ETF was established. Barclays holds 10 million shares, ranking among the tenth largest holders with a ratio of 0.2%.

An ETF-related person in Shanghai told a Securities Times reporter that foreign-funded institutions have recently been active in China’s ETF market. This series of investment behaviors shows foreign investors’ strong interest in A-share passive equity products. He believes that when investing in ETFs, the focus of foreign investors is not limited to the foreign-related themes they are good at. They also show a relatively high enthusiasm for participating in popular investment opportunities such as the A-share technology sector.

Actively deploy A-share ETFs

In fact, as of the middle of this year, many well-known foreign institutions have joined the queue of holders of A-share ETFs. Judging from the holdings of a single institution, Barclays leads the GF CSI Overseas China Internet 30 ETF with a huge share of 1.238 billion shares, accounting for 15.33%, becoming the benchmark for the share of A-share ETFs held by a single foreign investor.

At the same time, Barclays Bank holds 32.6058 million shares of the China Merchants Securities Hong Kong Technology ETF, with a holding of 31.17%. The holding ratio ranks first, demonstrating Barclays Bank’s concentrated investment strategy in specific theme ETFs. It is worth noting that in the first half of the year, Barclays increased its holdings in the Yinhua CSI Hong Kong Stock Connect Consumer ETF by more than 16%, and at the same time increased its holdings in the GF Nasdaq 100 ETF by 1.078 billion shares.

Barclays is undoubtedly the most active foreign institution in holding A-share ETF positions. As of mid-year, the bank was among the top 10 holders of 30 ETFs. As new ETFs are launched in the second half of the year, this number will grow.

However, Barclays is not the only foreign institution actively investing in A-share ETFs. As of the middle of the year, well-known foreign investors such as UBS Group AG, Nomura Singapore, Jane Street Hong Kong, Merrill Lynch International, Morgan Stanley International and Daiwa Asset Management all occupied the top ten holders of multiple A-share ETFs.

Specifically, UBS Group is one of the top ten holders of three products: Wells Fargo CSI 1000 ETF, Huatai-PineBridge GEM Technology ETF, and Harvest Hang Seng Technology ETF; Nomura Singapore is a shareholder of Huaxia S&P 500 ETF, Southern MSCI China A50 Interconnect The top ten holders of ETFs; Jane Street Hong Kong is the top ten holder of ICBC China Securities Hong Kong Stock Connect High Dividend Select ETF and Southern Hang Seng Hong Kong Listed Biotechnology ETF; Merrill Lynch International is the top ten holder of GF Nasdaq 100 ETF The top ten holders of Great holder.