China ETF Market Posting Solid Growth

ETF Trends

China’s ETF business has grown from $12 million in 2002 to $38.8 billion currently while the number of products has jumped from one to 138, the Financial Times reports Thursday.

“The Shanghai stock market is languishing at a three-year low after falling almost 9% since January but interest in China-focused exchange traded funds is growing strongly with investors and providers taking advantage of new rules that are helping to accelerate the development of China’s ETF market,” the newspaper said.

U.S.-listed ETFs that invest in China have staggered in 2012 on fears the world’s second-largest economy is slowing down. For example, iShares FTSE China 25 (FXI) is about flat for the year. [ETF Spotlight: China]

Yet in China, one factor driving the growth of the ETF market has been “the decision of regulators to permit the launch of cross-border physical ETFs for the mainland and Hong Kong as well as cross-market ETFs within China that can invest in Shanghai and Shenzhen markets at the same time,” the FT reports.

The relaxed rules have encouraged providers to introduce ETFs tied to China’s A-share markets.

Inflows to China ETFs in 2012 are a record $9.3 billion, according to the article.

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