SHANGHAI, March 26 (Reuters) - The Chinese fund ventures of Deutsche Bank and PineBridge Investments said on Monday they have received regulatory approval to launch China’s first exchange-traded funds (ETFs) that track both Shanghai- and Shenzhen- listed stocks.
The two ETFs, to be launched by Harvest Fund Management Co and Huatai-PineBridge Fund Management Co, will both track the CSI300 Index of China’s 300 biggest listed companies. An ETF is a fund traded on stock exchanges like stocks.
This would provide foreign as well as domestic institutions a more liquid tool to participate in the growth of the world’s second-biggest economy and also give a boost to China’s emerging hedge funds industry, some analysts said.
“Institutional investors such as sovereign wealth funds prefer ETFs because they’re more liquid than other passive fund products,” said Howhow Zhang, head of research at Shanghai-based fund consultancy Z-Ben Advisors.
“The new products should appeal to foreign institutional investors who are seeking China exposure and share China’s growth.”
China allows foreign investors to buy Chinese stocks and bonds under the so-called Qualified Institutional Investor (QFII) scheme and has granted licenses to an increasing number of sovereign wealth funds such as the Bank of Korea and Kuwait Investment Authority.
Approval of the new ETFs, which had been in preparation for five years, may also reflect regulators’ desire to encourage institutional investors such as insurers and pension funds to enter the domestic stock market, which slumped 22 percent last year, according to Zhang.
The new ETFs may give China’s emerging hedge fund industry a more effective tool to manage risks and design new products, according to Fan Xiangpeng, analyst at Sinolink Securities. (Editing by Muralikumar Anantharaman)