HSBC Global Asset Management has launched an ETF it claims to be the "first its kind" as it is constructed specifically for accessing China through a Stock Connect programme in Europe, rather than using an Renminbi Qualified Foreign Institutional Investor (RQFII) quota.
The HSBC MSCI China A inclusion Ucits ETF is now trading on the London Stock Exchange, with further listings planned across Europe.
According to the investment house, the ETF offers access to a cost-efficient way to invest in mainland Chinese securities in the MSCI Emerging Markets Index and will be paying dividends on a quarterly basis.
The ETF is designed to track the progressive partial inclusion of China A shares in the MSCI Emerging Markets Index over time.
It consists of large cap China A stocks that are accessible through either the Shanghai or the Shenzhen Stock Connect programmes, and that have been included in the MSCI China Index and the MSCI Emerging Market index with an inclusion factor of 2.5 per cent on 1 June 2018.
This will increase to 5 per cent in the second stage of the inclusion process in September.
Joseph Molloy, head of index and systematic equity portfolio management for HSBC Global Asset Management, said: "China is now the world's largest economy in terms of purchasing power and its estimated growth exceeds that of the developing world.
"The HSBC MSCI China A inclusion Ucits ETF gives foreign investors quick and easy access to mainland Chinese equities through China A shares, which were traditionally only available to mainland citizens.
"As the ETF is designed to track the progressive partial inclusion of China A shares in the MSCI Emerging Markets index over time, we believe it provides an excellent building block for investors to future-proof their portfolio using one single share.
"HSBC is one of the largest foreign financial institutions in China, with a long-standing heritage, strong expertise and an extensive on-the-ground footprint. This leaves HSBC Global Asset Management perfectly placed to help investors access this market."
AJ Somal, chartered financial planner at Aurora Financial Planning, said: "This could be of interest for clients who are looking for greater diversification in their portfolios, given the emerging market status, it would only form a small element of a client’s potential overall holdings."
aamina.zafar@ft.com
