Hong Kong’s exchange-traded funds account for about 5 to 7 percent of assets versus neutral funds, leaving ample room for growth, said Heidi Cai, head of international business at China Asset Management (Hong Kong).
Speaking at a panel held by Hong Kong Investment Funds Association on Monday, Cai noted that Hong Kong provides significant exposure to both local and mainland markets, with about 60 percent of ETF flows this year linked to A-share and H-share performance.
“Hong Kong can serve as a hub to attract investors globally,” Cai said.
Future expansion will depend on three factors: investor education, local equity market momentum and product diversity, she added.
Citing diversity, she noted that a slight appreciation of the yuan against the dollar this year has also driven interest in yuan-denominated ETFs, given the Hong Kong dollar’s peg to the greenback.
Globally, the ETF market could reach US$30 trillion (HK$234 trillion) within five years, according to Philippe El-Asmar, head of Asia Pacific ETF, direct and digital at JPMorgan Asset Management.
He said China’s fixed-income ETF market, at about US$80 billion, remains small compared with the US$600 billion overall market.
Commenting on Hong Kong’s policy address coming Wednesday, Andy Ng, head of iShares equity product strategy at BlackRock, said expanding and easing ETF Connect would help boost related market activity.
