ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Markets

Fund to invest purely in China government bonds debuts in Singapore

ETF to let investors tap Chinese onshore bond markets using new fund structure

The SGX Centre in downtown Singapore

SINGAPORE -- The Singapore Exchange debuted the world's largest exchange traded fund to invest purely in Chinese government bonds on Monday. The move is part of SGX's efforts to step up access to China for investors in the city-state.

Announced by the bourse last week, the move is the latest initiative by the SGX to build a portfolio of multi-asset offerings, trying to chip away at rival Stock Exchange of Hong Kong's prominence as a gateway for traders to mainland China.

The SGX in August announced a deal with U.K.-based index provider FTSE Russell to jointly develop and market an Asian and emerging markets-focused, multi-asset index derivatives offering.

"Global fixed income investors have been turning to Chinese sovereign bonds for added diversification and yields, and this product is a strong addition to our platform," said Loh Boon Chye, chief executive officer of SGX.

Managed by Hong Kong-based CSOP Asset Management Limited, the institutional-grade ETF replicates the performance of fixed-rate Chinese government bonds as measured by the FTSE Chinese Government Bond Index.

SGX said the fund has garnered "resounding investor interest" with an initial assets under management of $676 million, which it said demonstrated "robust demand" for efficient access to China's bond markets.

The product is also the first ETF to list under the new Variable Capital Companies framework launched by the Monetary Authority of Singapore this year -- a new corporate structure that adds to the stack of fund structures available in Singapore, including limited partnerships, companies and unit trusts.

"The new VCC framework will encourage the consolidation of fund domiciliation and fund management activities locally, creating a full-service fund ecosystem in Singapore and maximising value from the full fund management value chain. It will also strengthen Singapore's role as a key hub for fund managers to invest into the Asia-Pacific region," according to professional services firm Crowe Singapore.

More than 100 VCC funds have been set up in the city-state since the framework was introduced.

Jacqueline Loh, deputy managing director for Markets and Development at the Monetary Authority of Singapore, said, "The debut of this product class marks a new milestone for Singapore's financial sector, as we continue to connect global investors to Asia's promising market opportunities."

CSOP Asset Management noted that the China bond market has already reached $15 trillion -- the second largest in the world after the U.S..

"The Chinese Government Bond Index ETF is designed to help capture the investment opportunities brought by the booming China onshore bond market and its continuous inclusion into the world's major global indices," said Ding Chen, chief executive of CSOP.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more