Approval by Mandatory Provident Fund Schemes Authority (“MPFA”) of ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF as approved Index-Tracking Collective Investment Schemes ("ITCIS")

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CSOP Asset Management Limited (CSOP) is glad to announce that ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF (ticker: 3199.

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Tuesday, June 28, 2022
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Banking, Professional Services, Finance, USD, HK, Legislative council, Securities and Futures Commission, Ministry, Industry, Bank of China, Agricultural Development Bank of China, Exim Bank, Ministry of Finance of the People's Republic of China, RMB, ETF, Risk, Investment, Security (finance), Mandatory Provident Fund, MPF, Qualification, Policy, Prospectus, Leadership, Government, ICBC, Agricultural Development Bank, CSOP, Bank, PRC
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ASIA PACIFIC, HONG KONG, ASIA, SINGAPORE, CHINA
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CSOP ASSET MANAGEMENT LIMITED
Summary
Key Points: 
  • CSOP Asset Management Limited (CSOP) is glad to announce that ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF (ticker: 3199.
  • HK) was admitted to Index-Tracking Collective Investment Schemes ("ITCIS") as the first Chinese government bond ETF approved by Mandatory Provident Fund Schemes Authority (MPFA) on 23 June 2022.
  • As of April 2022, foreign institutions hold more than RMB 3.7 trillion (over USD 580 billion) of onshore Chinese bonds6.
  • As the leading Chinese government bond ETF issuer in the region, CSOP manages the largest Chinese government bond ETFs in Hong Kong and Singapore respectively, bridging China onshore government bond market with investors in the region.


CSOP Asset Management Limited (“CSOP”) is glad to announce that ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF (ticker: 3199. HK) was admitted to Index-Tracking Collective Investment Schemes ("ITCIS") as the first Chinese government bond ETF approved by Mandatory Provident Fund Schemes Authority (“MPFA”) on 23 June 2022. 3199.HK is the largest China government bond ETF in Hong Kong with asset under management of USD 775 million, equivalent to around RMB 5.2 billion1, rendering its leadership as one of the world’s largest Chinese government bond ETFs. Since inception in February 2014 till end of May 2022, 3199.HK has achieved a steady return as high as 33.26% in RMB term2, equivalent annualized return of 3.54%. As an ITCIS fund now, 3199.HK is eligible to offer investment opportunities of China’s fast growing onshore government bond market to meet demands from both MPF scheme members and the industry.

The significance of China onshore market has become too important to ignore. With onshore market size at around USD 18 trillion, China’s bond market has become the second largest in the world, trailing just behind the U.S.3. The further opening-up of China’s onshore bond market presents attractive opportunities to global investors. According to historical data, the China onshore bonds offer a higher total return with a relatively lower return volatility compared to other major economies4. In addition, the low correlation between China onshore bonds and global bonds would potentially provide greater portfolio diversification for investors5. Worth mentioning, in the past few years, foreign investments continued to flow into China onshore market. As of April 2022, foreign institutions hold more than RMB 3.7 trillion (over USD 580 billion) of onshore Chinese bonds6. Albeit the enormous amount, which is five times more than that of 2015, the foreign holding percentage is just around 3.2%, implying severe underinvestment by global institutions. If fully included in the three major global fixed income indices, the Chinese onshore bonds are expected to attract about USD 320 billion of inflow in aggregation7. In anticipation of the upcoming full inclusion, it is deemed a good timing for investors to tap into the promising China onshore bond market. Taking into account all factors, Hong Kong's Legislative Council has passed a regulation to allow MPF to invest in Chinese government bonds, which has already taken effect upon gazettal on June 2.

CSOP, the most representative Chinese offshore asset manager, as well as an ETF leader in Asia, is known for its experiences and expertise in managing the Chinese government bond ETFs. Melody He, Deputy CEO of CSOP comments “. As the leading Chinese government bond ETF issuer in the region, CSOP manages the largest Chinese government bond ETFs in Hong Kong and Singapore respectively, bridging China onshore government bond market with investors in the region. The inclusion to ITCIS is another milestone of 3199.HK. We believe 3199.HK, a transparent investment tool with relatively low cost, easy access and diversified bond holdings will meet the MPF scheme members’ demand.”

About CSOP Asset Management Limited

CSOP Asset Management Limited (“CSOP”) was founded in 2008 as the first offshore asset manager set up by a regulated asset management company in China. With a dedicated focus on China investing, CSOP manages public and private funds, as well as providing investment advisory services to Asian and global investors. In addition, CSOP is best known as an ETF leader in Asia. As of 31 December 2021, CSOP has more than USD 11 billion in assets under management.

IMPORTANT: Investment involves risks. Investment value may rise or fall. Past performance information presented is not indicative of future performance. Investors should refer to the Prospectus and the Product Key Facts Statement for further details, including product features and risk factors. Investors should not base on this material alone to make investment decisions.

Product Risk Disclosure:

ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF

  • ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF (the “Sub-Fund”) is a “physical” ETF meaning it will invest directly in RMB denominated and settled fixed-rate bonds issued by the Ministry of Finance of the PRC, the China Development Bank, the Agricultural Development Bank of China or the Export-Import Bank of China and distributed within the PRC mainland (the “ Chinese Government Bonds and Policy Bank Bonds”) through the Manager’s status as a Qualified Foreign Investor (“ QFI”), and/or via the initiative for mutual bond market access between Hong Kong and Mainland China (“ Bond Connect”).
  • Because the Sub-Fund invests in fixed-income securities, the Sub-Fund is subject to interest rate risk. Interest rate risk is the risk that the value of the Sub-Fund’s portfolio will decline because of rising interest rates. Interest rate risk is generally lower for shorter-term investments and higher for longer-term investments.
  • The Sub-Fund is subject to liquidity risk as continued regular trading activity and active secondary market for bonds is not guaranteed. The bid and offer spread of the price of bonds may be large, so the Sub-Fund may incur significant trading and realisation costs and may suffer losses accordingly.

Please note that the above listed investment risks are not exhaustive and investors should read the Prospectus and the Product Key Facts Statement in detail before making any investment decision.

This material has not been reviewed by the Securities and Futures Commission.

Issuer: CSOP Asset Management Limited

Please refer to the offering documents for the index provider disclaimer.

1 CSOP, as of 23 June 2022

2 CSOP, Bloomberg, as of 31 May 2022

3 Bloomberg, CCDC, Shanghai Clearing as of 29 April 2022

4 FTSE Russell, from March 2009 to May 2022

5 FTSE Russell, from March 2009 to May 2022

6 Bloomberg, CCDC, Shanghai Clearing as of 29 April 2022

7 FTSE Russell, Bloomberg, J.P. Morgan and UBS estimates

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