First European ETF Is Launched In China

July 18, 2014

Chinese asset management firm HuaAn Asset management has launched the first European exchange traded fund for Chinese investors, giving them access to Germany’s DAX.

The HuaAn Germany DAX 30 ETF ETF will enable Chinese investors to access the performance of leading German companies for the first time ever. It is set to be launched on the Shanghai stock exchange.

The DAX measures the development of the 30 largest and most liquid companies on the German  equity market and represents around 80 percent of the market capitalization authorized in Germany. It currently serves as the basis for more than 135,000 financial products and is one of the largest underlyings for derivatives globally.

Li Qing, CEO of HuaAn, added: "As one of the innovation leaders in China’s mutual fund industry, HuaAn is dedicated to product and business innovation to meet investors’ growing demand for wealth management and asset allocation. We are pleased to launch the Germany DAX 30 ETF & feeder fund, which is the first mutual fund specialising in German stocks in China. This product also opens the door to invest in Germany and the EU for China investors…. The era of global asset allocation has come to China, and HuaAn aims to be the leading  asset management company at home and abroad."

Hartmut Graf, chief executive officer, STOXX, said in a statement:  “DAX is one of the most recognized and well-known blue-chip indices in the world. As a completely rules-based and transparent barometer of top German companies, the index remains a leading choice to underlie a wide range of financial products.”

There are currently 83 ETFs listed in China with an AUM of $23.9 billion, according to data from Deutsche Bank.

Earlier this year China opened its doors to foreign investors by increasing its Renminbi qualified foreign institutional investor (RQFII) scheme, meaning that foreign investors would be able to invest in mainland China A shares.

The latest RQFII quota system allows a certain amount of capital to be allocated to an asset manager to directly invest in A-shares, instead of via derivatives. Once the quota is used up, the firm has to apply to the Chinese authorities for an extension, and it is not known in advance how long it will take or how much quota you will receive.

However, most recently, index providers MSCI and SPDJI have both said that they would not be including China A shares in their indexes due to concerns around restrictions on foreign investors and tax treatment.

 

 

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