Trading starts under Shanghai-Hong Kong ETF Connect

SHANGHAI: Shanghai's exchange-traded fund market exceeds 1 trillion yuan (US$156.84 billion) in capitalization, making it the world's sixth biggest, the city's bourse said on Tuesday, as trading started under the Shanghai-Hong Kong ETF Connect.

Shanghai's ETF market is Asia's No.2 by market cap, but by trading volume, it is already the region's biggest, Shanghai Stock Exchange (SSE) deputy general manager Liu Ti said in a statement. Japan is home to Asia's biggest ETF market by size.

Liu's comments come as the first pair of ETFs were listed on Tuesday under a cross-listing scheme between Shanghai and Hong Kong.

A feeder fund listed in Shanghai helps channel mainland Chinese money into Hong Kong-listed CSOP Hang Seng TECH Index ETF, which buys into top Chinese tech firms including Alibaba, Xiaomi and Tencent.

In the other direction, Hong Kong investors can access Shanghai-listed Huatai-Pinebridge CSI Photovoltaic Industry ETF through a feed fund listed in Hong Kong.

SSE will "step up globalisation efforts, and study the rollout of more channels for foreign investors to participate in China's onshore market", Liu said.

Last month, Shanghai and Korean exchanges agreed to launch a cross-border ETF scheme, aiming for closer cooperation in index development and bond markets.

In 2019, Shanghai launched a similar ETF connect with Japan. Chinese investors can also access securities in the United States, France and Germany via outbound ETFs listed in Shanghai.

The ETF pair listed on Tuesday were the result of partnership between Hong Kong-based CSOP Asset Management Ltd and Shanghai-based Huatai-PineBridge Fund Management Co.

(US$1 = 6.3758 yuan)

(Reporting by Samuel Shen and Andrew Galbraith; Editing by Nick Macfie)