SocGen China fund JV plans ETF tracking Japan TOPIX

By Samuel Shen and Edmund Klamann

SHANGHAI, Nov 11 (Reuters) - French bank Societe Generale's (SocGen) China fund venture said on Wednesday that it will develop exchange-traded fund (ETF) products that track Japan's TOPIX Core30 Index .TOPXC, giving Chinese investors exposure to the world's second-biggest economy.

The announcement came as China last month resumed issuing quota under the country's Qualified Institutional Investor (QDII) scheme after a 17-month hiatus as the global financial market stabilised. China launched QDII in 2006 to allow Chinese money to be invested in overseas financial markets.

Fortune SGAM Fund Management Co signed an exclusive agreement with the Tokyo Stock Exchange in late October to develop products using TOPIX Core30, which comprises Japan's 30 biggest stocks by market value, including household names such as Toyota (7203.T), Sony (6758.T) and Nintendo (7974.OS), the company said in a statement.

"From a historic perspective, the TOPIX 30 Index is at a relatively low level, and has long-term investment value," Fortune SGAM said. "Investing in the index can help Chinese investors better diversify risks in global asset allocations."

Analysts said, however, that it would take at least a year for such a fund to be launched.

"The trend for QDII is to develop products that track overseas indexes," said Zhang Haochuan, analyst at Shanghai-based fund consultancy Z-Ben Advisors Ltd. "SGAM lags some other competitors and it takes time to develop new products and get regulatory approval."

Guotai Asset Management Co, the Chinese venture of Italian insurer Assicurazioni Generali SpA (GASI.MI), in March signed a licensing agreement with Nasdaq OMX Group Inc (NDAQ.O), allowing the firm to develop products in China using the Nasdaq 100 Index .NDX.

Earlier, China Southern Fund Management Co signed an agreement with Standard & Poor's to jointly develop QDII products using the Standard & Poor's 500 stock index .SPX.

ETFs are funds traded on stock exchanges like stocks, but allows investors to buy a basket of shares and bonds in a single trade.

The Shanghai Stock Exchange is working with regulators and fund houses, hoping to introduce China's first ETF under the QDII scheme.

(US$1=6.832 Yuan)

(Editing by David Cowell)