Although China has seen a rise in passive investing recently, most investors still favor trading individual stocks or buying actively managed mutual funds. Asset managers are hoping that will change with the ETF trading link.
International investors now have additional options for onshore investments, while domestic Chinese investors can access funds that own the Hong Kong-listed shares of internet giants like Alibaba and Baidu with less difficulty.
According to Ying Rong, director of quantitative investment at China Asset Management, buying Chinese ETFs allows investors to obtain exposure to sectors without having to conduct bottom-up research on individual equities.
ETFs have been added to Stock Connect almost eight years after the initial program’s launch, allowing investors in Hong Kong and mainland China to trade specific equities on each other’s exchanges.
Data provider Wind said that Stock Connect has so far invested a net US$250 billion into Chinese companies listed in Shanghai and Shenzhen.
