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The China International Capital Corporation (HK) Ltd (CICC) and the Shenzhen Securities Information Co Ltd signed an agreement on June 4, 2009, indicating the CICC-SZSE 100 China Index Fund will be launched in Hong Kong. This is the first overseas ETF tracking the SZSE Series Indices and also the first ETF issued by the CICC. Executives from the Shenzhen Stock Exchange (SZSE) and the CICC attended the signing ceremony. It may be launched within four months.
Experts noted the risk-return feature and the component stock structure of the SZSE 100 Index are much different from other overseas ETFs linked to index. The launch of the CICC-SZSE 100 China Index Fund will promote overseas investors’ re-recognition of the investment value of China’s multi-layered market.
In recent years, overseas investors have shown strong desire to invest in China, and the A-share ETFs become the important investment instrument. However, the overseas China-concept ETFs all track the large-cap blue-chip index, while products tracking mid and small cap index are absent. The CICC-SZSE 100 China Index Fund will fill the market blank by offering investors the first-ever A-hare ETF highlighting in return.
In terms of industry structure of component stocks, other overseas ETFs are dominated by financial industry with over 40 percent weight, and the next is the 15-percent-weight energy industry. While the SZSE 100 Index are dominated by multiple industries including the real estate, metal smelting, consumer products and commercial services. The weight for the biggest industry is 17 percent, creating a more balanced distribution.
It is noted the overseas product development of the SZSE Series Indices is just at the beginning, but its market potential is highly expected. Excluding the CICC who has already got the SZSE 100 authorization, a great number of other companies are applying for the authorization of the SZSE Component Index and the SZSE SME Board Index. The CICC expressed optimism towards the outlook of the overseas A-share index–based products. Besides the SZSE 100 ETF, it will also launch products focused on agriculture, real estate, regional finance, leading consumer and infrastructure investment, which will be jointly compiled with the Shenzhen Securities Information Co Ltd.
