17-03-2013, 01:45 AM
Goh Eng Yeow wrote about buying China ETF in last week’s Sunday Times and somebody also mentioned buying the A50 ETF in this forum becoz China is a transformational story unfolding. I agree. I spend some time in the last week digging out some information on China ETF’s available in SGX and HKEX. This is a simple summary and I would love to hear your views.
Constituent Stocks
The largest mainland companies are the banks and they inevitably appeared among the constituent stocks of China ETF’s. If the Chinese banking sector blows up, the ETF will definitely be badly affected.
H-shares vs A-share ETF
For those unfamiliar, H-shares refer to stocks of mainland companies listed in HKEX. Most of them are also listed in the mainland stock exchanges, where they are known as A-shares. In general the A-shares are traded at a premium over H-shares (confession#1: I have not done an actual price comparison for the individual stocks, this is just what I read ). Moreover, the HKEX is definitely better regulated compared to the mainland exchanges.
Direct vs Synthetic
I am still not able to understand much about synthetic ETF, though the SGX website has a 3 page comparison. To me counterparty risk and derivatives sound risky. (confession#2: I have never bought any ETF before, so this is all new to me).
If I am not wrong, A-shares ETF are all synthetic as foreigners are not allowed to buy from the mainland exchanges. I would appreciate if someone can confirm or correct this.
All those China ETF listed on SGX are also synthetic.
Based on the little that I have found out so far, I am more interested in H-shares, direct ETF. Does that mean that I can only buy from HKEX ? The one that I am considering at the moment is the Hang Seng H-shares ETF which consists of 45 stocks. More information can found on the websites:
http://www.hkex.com.hk/eng/invest/compan...langcode=e
http://bank.hangseng.com/1/2/investment/...f/overview
A close equivalent of it will be SGX listed Lyxor ETF China Enterprise (HSCEI), but as I mentioned earlier, it is synthetic. Moreover it is traded in USD.
Next is to find out how to buy stocks from HKEX (confession#3: Other than my company shares, I have only bought from SGX so far in my life).
Constituent Stocks
The largest mainland companies are the banks and they inevitably appeared among the constituent stocks of China ETF’s. If the Chinese banking sector blows up, the ETF will definitely be badly affected.
H-shares vs A-share ETF
For those unfamiliar, H-shares refer to stocks of mainland companies listed in HKEX. Most of them are also listed in the mainland stock exchanges, where they are known as A-shares. In general the A-shares are traded at a premium over H-shares (confession#1: I have not done an actual price comparison for the individual stocks, this is just what I read ). Moreover, the HKEX is definitely better regulated compared to the mainland exchanges.
Direct vs Synthetic
I am still not able to understand much about synthetic ETF, though the SGX website has a 3 page comparison. To me counterparty risk and derivatives sound risky. (confession#2: I have never bought any ETF before, so this is all new to me).
If I am not wrong, A-shares ETF are all synthetic as foreigners are not allowed to buy from the mainland exchanges. I would appreciate if someone can confirm or correct this.
All those China ETF listed on SGX are also synthetic.
Based on the little that I have found out so far, I am more interested in H-shares, direct ETF. Does that mean that I can only buy from HKEX ? The one that I am considering at the moment is the Hang Seng H-shares ETF which consists of 45 stocks. More information can found on the websites:
http://www.hkex.com.hk/eng/invest/compan...langcode=e
http://bank.hangseng.com/1/2/investment/...f/overview
A close equivalent of it will be SGX listed Lyxor ETF China Enterprise (HSCEI), but as I mentioned earlier, it is synthetic. Moreover it is traded in USD.
Next is to find out how to buy stocks from HKEX (confession#3: Other than my company shares, I have only bought from SGX so far in my life).