HSI licenses Fubon to use indices for inverse and leveraged Taiwan-listed ETFs
Demand for Mainland-Hong Kong cross-market indices, such as the benchmark Hang Seng China Enterprises Index (HSCEI), is expected to grow into a significant segment of the market, in light of growing investor anticipation of the upcoming Shenzhen-Hong Kong stock connect, according to Vincent Kwan (pictured), director & general manager at Hang Seng Indexes.
"We plan to expand our Mainland- Hong Kong cross-market index series to capture the market dynamics that exist between the Hong Kong and Mainland stock markets," Kwan said. "In response to the rising demand for smart beta indexes, we also plan to expand our smart beta index series."
Hang Seng Indexes, which is a wholly-owned subsidiary of Hang Seng Bank, last week licensed Taiwan's Fubon Asset Management to use two of its HSCEI indices as underlyings for a pair of new exchange-traded funds (ETF's).
The two ETF's, one inverse and the other leveraged, are pegged to HSI's HSCEI Short Index and HSCEI Leveraged Index, respectively. The indices aim to provide -100% and 200% of the daily performance of the HSCEI, respectively. The funds were listed on the Taiwan Stock Exchange on August 5.
With the new ETF's, the HSCEI Short and Leveraged indices now underlie a total of four funds, two in Taiwan and two in Japan. The whole Hang Seng family of indices underlie a total of 43 exchange-traded products, including funds and notes, the index provider said.
"While there is still strong interest in our existing indexes, we are receiving a growing number of client enquiries about index customisation and index calculation services for innovative and diverse investment strategies," Kwan pointed out, noting that the company will expand its customised strategy plays.
In Hong Kong in particular, where the regulator just allowed leveraged and inverse products in February, demand is promising, according to Kwan.
"Once the local market becomes more familiar with these types of investment products, we expect the SFC to consider authorising leveraged and inverse products that are linked to local indexes [which are much more popular]," he said.
A total of 3,547 tranche products linked to one or more of Hang Seng's indices have been added to the SRP database in 2016, including 1,104 products linked to the HSCEI.
Meanwhile, Hang Seng Indexes has been named in the shortlists for the 'Best Index Provider' and 'Best Proprietary Index Provider' titles at the upcoming SRP Asia-Pacific Awards 2016.
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