Hong Kong Stock Exchanges and Clearing (HKEx) is exploring the possibility of launching new cross-border exchange traded funds (ETFs) with the Shanghai Stock Exchange (SSE) according to chairman Ronald Arculi.
Speaking at a joint HKEx – SSE conference on the development of ETFs and other index products held in Hong Kong, Arculi cited the growth of ETFs in Hong Kong and elsewhere in the region as proof of their importance. HKEx currently lists 76 ETFs on its exchange, and trading accounted for HK$600 billion (US$77 billion) last year, or 3.5% of total overall market turnover.
“Since 2000, we have seen an exponential increase in the number of ETFs listed and their contribution to market turnover,” he said. “Asian investors are increasingly viewing ETFs as an important part of their portfolios, which provide them with exposure to developing economies.”
From January to March 2011, HKEx saw ETF turnover of HK$160 billion (US$20.5 billion), making it the eighth largest market in the world and first in Asia, according to Arculi. As part of its ongoing three-year strategic plan for 2010-2012, the exchange has been reaching out to the mainland in an effort to grow its business; it also signed a ”closer co-operation agreement' with the SSE in January 2009.
Arculi also noted the rise of structured products and derivatives such as futures and options. Turnover of index-linked structured products trading on HKEx, totalled HK$2.5 trillion (US$321 billion) in 2010, or 14.62% of securities market turnover. This compares with HK$12 billion (US$1.45 billion) worth of index-linked structured products traded in 2000, accounting for only 0.4% of market turnover.