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About five to ten ETFs are prepared to be listed on the Shanghai Stock Exchange (SSE), according to President Zhang Yujun of the SSE at the 8th International Forum for Chinese Securities Investment Funds on December 2.
Zhang described the bourse's role on the fund market with 3 key words, namely, innovation, supervision and services. The bourse will promote the innovation and self-regulatory supervision of the fund industry as well as continuously improve the services for the industry.
According to Zhang, as the committed supporter and consultant for the fund industry's innovation, the exchange has promoted the development of passively-managed funds and the rapid growth of indexation investment in China. In 2009, index funds including the ETF markets of the SSE and the Shenzhen Stock Exchange saw a rapid expansion. Two ETFs were issued through the SSE, and Bosera SSE Mega-cap ETF will be issued next Monday. With four listed ETFs and the to-be-launched SSE Mega-cap ETF, the SSE expects the total size of ETFs to reach US$10 billion. "Compared with an US$800 billion ETF market, there's still room for growth", said Zhang.
He said about five to ten ETFs still want to be listed on the SSE, so he hoped the fund companies to press on with the work.
Referring to the general market performance in 2009, Zhang said the passively-managed investment of index funds outperformed the stock-focused funds. By the end of November, the annual yields of index funds had exceeded 70%, while that of stock-focused funds were around 50%.
As for the supervision role of the bourse, one of the supervision emphases of the SSE is the fund companies' investments. Following the launch of the SSE's new trading system and monitoring system this year, the SSE could check on fund companies' investments much clearly thanks to the upgraded effectiveness and supervision transparency of the monitoring system. Next year, apart from continuously strengthening the supervision over the securities investment, especially the supervision over the fund companies' acts, the SSE intends to increase communications with the fund industry and raise the investment compliance awareness of fund investors.
Moreover, Zhang stated that the SSE would strive to provide relevant services for the fund industry within its authority. Firstly, in addition to the listing and trading of ETFs, there are 13 closed-end funds listed on the SSE, who provides such services as trading and transfer. Zhang urged the fund companies to pay more attention to the innovation in the closed-end funds.
Secondly, the SSE provides such services as redemption, sales and trading for over 50 open-end funds through its Mutual Funds Distribution Channel. The bourse will push the active investment next year by continuously doing a good job in this field, especially by further improving the trading through the Mutual Funds Distribution Channel.
Zhang pointed out that fund companies, especially large-scale ones, should pay more attention to the group technical strengths and the technical support capabilities improvement. "Many fund companies now have tens of millions of clients, so the back-end capabilities are essential", said he.
