China, Japan inches closer to cross-list exchange-traded funds

Tokyo Stock Exchange/Bloomberg

  • share this article

The ETF link will allow some of the trillions of dollars stashed away by Japanese savers to flow into the world’s best-performing stock market.

Monday 22, April 2019

(Bloomberg) --China and Japan made key progress on a programme that will allow cross-listing of exchange-traded funds and make it easier for investors to buy shares in each other’s nations.

Yi Huiman, the Chairman of the China Securities Regulatory Commission, said, “Both sides have sped up market access and strengthened regulatory cooperation since a memorandum of understanding was signed in October.”

While he did not say when the so-called ETF Connect would start operating, Nikkei previously reported that this could be as early as May.

China is pressing ahead with plans to allow more foreign investors into its market, including those from historical rival Japan, before Xi Jinping makes his first visit to the country as president for the Group of 20 summit in June.

The Shanghai Composite Index has risen almost 30 per cent this year, the biggest gain among more than 90 global indexes. Inflows are expected to increase after MSCI said it will more than quadruple the weighting of China-listed equities in a benchmark index.

Hong Kong’s Securities and Futures Commission is also discussing with Chinese authorities the possibility of dual-listed exchange-traded funds in China.

However, Christina Choi, the SFC Executive Director and Head of the Investment Products Division, said that an ETF Connect is proving difficult to build, citing issues including differences in cross-border settlement systems and operating timings.

TAGS : China Securities Regulatory Commission, Nikkei, ETF Connect, Shanghai Composite Index, Hong Kong’s Securities and Futures Commission

print this article