Taiwan to Launch China A-Shares ETF Platform

ETF Trends

Taiwan’s Financial Supervisory Commission confirmed Wednesday the country will launch an exchange traded funds platform later this year allowing investors access to China’s A-shares markets.

The ETFs being proposed will give Taiwanese fund managers access to stocks traded in Shanghai and Shenzhen, China’s A-shares markets, under the renminbi-qualified foreign institutional investor (RQFII) program.

“The passage of the ETFs is largely contingent on the passage of a trade-services pact between Taiwan and China, which has been held up in Taiwan’s legislature on concerns over its impact on local industry,” Reuters reported.

Currently, China limits foreign investors’ access to A-shares to Qualified Foreign Institutional Investors and Renminbi Qualified Foreign Institutional Investors. However, the world’s second-largest economy is looking to boost foreign investment and increased access to A-shares is one way of doing that. [A-Shares ETFs Offer Deeper China Access]

As has been seen with the recent debuts and conversions of several A-shares ETFs listed in the U.S., ETF providers partner with asset managers with RQFII status. For example, the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) is issued by Deutsche Bank and the bank’s partnership with Harvest Fund Management, China’s second-largest asset manager, is a key element in the bank being able to offer an A-shares ETF that holds actual equities. Harvest has RQFII status.

Last week, KraneShares launched the KraneShares Bosera MSCI China A ETF (NYSEArca:KBA) after partnering with Bosera Asset Management, China’s fifth-largest asset manager, to gain RQFII status. [New A-Shares ETF Comes to Town]

Earlier this year, Market Vectors entered an agreement with China Asset Management, China’s largest mutual fund manager by assets under management, so that the Market Vectors China ETF (PEK) could convert from A-shares derivatives to equities.

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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