Index for Hong Kong stock market

Index service provider China Securities Index (CSI) has developed what it claims is the first market-monitoring index tracking Hong Kong securities. The CSI HK 100 index is designed to reflect the performance of the Hong Kong stock market following the rapid economic integration of mainland China and Hong Kong.

The weighted and diversified index screens the entire Hong Kong stock market - including blue chips, H-shares and red chips - according to market capitalisation and liquidity to select 100 constituent securities listed on the Hong Kong stockmarket (SEHK or HKEX).

As of 30 April, the top 10 constituent securities of CSI HK 100 were: HSBC, China Mobile, China Construction Bank, ICBC, China Life Insurance, PetroChina, CNOOC, SHKP, Cheung Kong and HKEX.

At the same time, BOCI-Prudential Asset Management announced the launch of WISE-CSI HK 100 Tracker, the first exchange traded fund (ETF) tracking the CSI HK 100 and a sub-fund of BOCI-Prudential’s WISE ETF series. To achieve its investment objective, the fund will invest in a representative sample of the index securities selected by fund manager BOCI-Prudential.

“Thanks to the fast economic integration of Hong Kong and mainland China, Hong Kong shares the benefits of China’s robust economic growth and the two economies have now become more complementary,” said Ma Zhi-Gang, (pictured right) managing director of CSI. “Meanwhile mainland investors, especially qualified domestic institutional investors (QDIIs), regard the Hong Kong stock market as the primary foreign investment market. In light of the rising influence by the enterprises and investors of mainland China on the Hong Kong financial market, investors are in need of a better representative index to closely reflect Hong Kong’s equity market. We believe CSI HK 100 will become an important benchmark index for both the QDII products and the global investors investing in Hong Kong.”

New small cap ETFs

iShares, the ETF arm of Barclays Global Investors, has launched three new small-cap ETFs.

The iShares S&P SmallCap 600 is designed to provide investors with liquid exposure to US small cap stocks across a wide range of sectors. The main sectors covered as of mid-March were: IT (18%), financials (17%), industrials (17%), healthcare (14%) and consumer discretionary (13%).

The iShares MSCI AC Far East ex-Japan SmallCap aims to provide investors with small cap exposure to developed and emerging market economies in the Far East, including South Korea (25%), Taiwan (23%), Hong Kong (15%) and China (13%) - and across a range of sectors including financials (23%), consumer discretionary (19%) and industrials (18%).

And the iShares MSCI Japan SmallCap has been created to provide investors with exposure to Japanese small-cap companies. Its main sectors include financials (22%), industrials (22%), consumer discretionary (21%) and IT (12%).

“Although small caps are considered more volatile than other types of equities, research suggests that they can outperform large caps over the long term,” said Frank Henze, (pictured left)head of product development at iShares.

“Small cap stocks have, therefore, gained in popularity across a wide spectrum of investors as they recognise how these stocks are driving returns in customers’ portfolios. It is our belief that small cap stocks will continue to contribute to future economic growth and therefore represent an attractive investment choice.”

New credit derivative and infrastructure trackers

EasyETF, the joint ETF platform of BNP Paribas and AXA Investment Managers, has introduced four new credit derivatives and infrastructure indices trackers on NextTrack, the Euronext segment dedicated to ETFs.

The EasyETF iTraxx Europe HiVol is based on 30 of the most volatile credit derivatives among the 125 names covered by iTraxx Europe. iTraxx Crossover aims to offer higher yields and volatility than iTraxx Europe HiVol with a greater level of risk. It is made up of 50 credit derivatives in European companies actively managed at the frontiers of investment grade and high yield.

Between the funds’ creation in late July 2007 and the end of April this year, iTraxx Europe HiVol and iTraxx Crossover have had inflows of €214m and €97m respectively.

Infrastructure indices trackers EasyETF NMX30 Infrastructure Global and EasyETF NMX Infrastructure Europe have also been launched on NextTrack and are designed to follow the NMX infrastructure indices.

Data share agreed

The Vienna (VSE) and Sarajevo (SASE) stockmarkets have agreed to share data. This is the third agreement under which another exchange disseminates VSE data, and follows similar arrangements between the VSE and the Budapest and Bucharest exchanges.

Data vending activities have increased sharply within the VSE over the past few years, with 95 vendors among its customers acting as wholesalers who ensure the distribution of financial information and price data.


ETF ratings

Moody’s Investors Service has awarded the db x-trackers’ II EONIA Total Return Index ETF, the sterling Money Market ETF and the US dollar Money Market ETFs by Deutsche Bank a bond fund credit rating of AAA and a market risk rating of MR1.

FTSE4Good ETF licence

Bolsas y Mercados Españoles (BME) - which integrates the companies that manage Spain’s securities markets - and global index company FTSE Group (FTSE) have licensed financial services group BBVA to use the FTSE4Good IBEX index as the basis of an ETF to be listed on the Spanish Stock Exchange.