Hong Kong experienced a big development in the ETF market in 2010. It started off by 18 ETFs being listed in the SEHK, 12 of them tracking Mainland A-Share Index and 6 of them tracking overseas indices. Now there are 61 ETFs listed and this number is still increasing.
The market environment in Hong Kong is now offering a good choice of investment options for people looking for ETF products. By allowing overseas ETFs to be authorized for sale in Hong Kong, the ETF market has also scope for expansion. If the regulatory commission of Hong Kong can focus on the factors of building unique ETF products and a built in arbitrage mechanism to keep the trading prices close to NAV, the efficient trading of ETFs can very well be put forward. The opportunities that Hong Kong is currently providing can be leveraged on to make it a favorite in the Asian ETF market.
Even though vast majority of investors still keep their money in mutual funds, more investors are looking for a way to enter the Hong Kong ETF market as well, due to their low cost.
Currently the iShares MSCI Hong Kong Fund (NYSE: EWH) is a well performing ETF for the Stock Exchange of Hong Kong. Hong Kong is also hosting the ETF & Indexing Investment Summit Asia this year. This calls for more investment opportunities in the Hong Kong equity market.
Not only the EWH ETF, but foreign ETFs are also listed in the SEHK. Recently Mirae Asset Global Investments announced the Mirae Asset TIGER KOSPI 200 ETF (TIGER KOSPI 200) which is tracking the South Korean KOPI 200 Index. HSBC has also taken a step in launching an ETF in the Hong Kong market recently, the HSBC MSCI Hong Kong ETF. These are steps that are actually opening doors for the progressive Hong Kong market.
The increased number of Hong Kong ETFs can also be a good indicator for investors that the Hong Kong economy is stabilizing from recent setbacks in the region. One of the indicators for that is that Hong Kong’s retail sales just increased to an 18.3% value since 2010. The said improvement in sales was believed to be contributed by the excellent tourism management and the good local consumer relationship between businesses. Along with the progressive economic sectors in this region the securities market of Hong Kong has gained an international level and is currently the second largest in Asia after Tokyo.
In recent studies, projections show that Hong Kong’s economy will experience an average growth of 5% in the coming years. This can be a good indicator for Hong Kong ETF investors to make their moves by launching more sector based ETFs.