SHANGHAI |
SHANGHAI Dec 27 (Reuters) – Bank of Montreal’s (BMO.TO)
China fund venture will launch the country’s first
exchange-traded fund (ETF) that tracks the benchmark Shanghai
stock index, heralding more innovations in ETF products to come
in the world’s second-biggest economy.
Fullgoal Fund Management Co said on Monday it would launch
early next year an ETF that tracks the Shanghai Composite Index
.SSEC, China’s first equity index that was compiled two
decades ago when the country’s stock market was established.
Despite a boom in index publishing over the past 20 years,
the Shanghai Composite Index — representing 923 companies
listed in the city — remains the most influential index both
home and abroad, said Xie Wei, vice general manager of the
Shanghai Stock Exchange.
“Despite academic debates over the representativeness of the
index,” it remains the most-watched index in China, and is
widely viewed as a barometer of the broad domestic market,” Xie
told a launch event for the new ETF in Shanghai.
The Shanghai Composite Index, which started at 100 points in
December 1990, ended 1.9 percent lower on Monday at 2,781.4
points. .SSEC
No fund house has yet attempted to launch an ETF linked to
the index before, in part because of the technical challenges of
tracking an index based on nearly 1,000 companies.
The more than 2,700 percent surge in the Shanghai index
during the past two decades compares with a 660 percent gain in
Hong Kong’s Hang Seng Index .HSI and a 333 percent rise in the
Dow Jones Industrial Average .DJI over the same period.
Having already launched 20 ETFs in the past years, Chinese
fund managers have announced plans to continue their innovative
push in the ETF arena, including the country’s first ETFs
tracking overseas indexes and the first ETF products that invest
in both Shanghai- and Shenzhen-listed stocks.
Chinese fund houses may next year launch ETFs that track the
CSI300 index .CSI300, which represents the country’s biggest
companies that trade on China’s two exchanges, according to Wu
Xianxing, analyst at Haitong Securities Co in Shanghai.
The CSI300 is used as the underlying index for China’s index
futures, so planned ETFs tracking the index would draw interest
from investors seeking risk hedging or arbitrage, Wu said.
(Reporting by Samuel Shen and Jason Subler. Editing by Jane
Merriman)