CSOP Asset Management Limited (“CSOP”) is glad to announce that ICBC CSOP FTSE Chinese Government and Policy Bank Bond Index ETF (ticker: 3199. HK) was admitted to Index-Tracking Collective Investment Schemes (“ITCIS”) as the first Chinese government bond ETF approved by Mandatory Provident Fund Schemes Authority (“MPFA”) on 23 June 2022. 3199.HK is the largest China government bond ETF in Hong Kong with asset under management of USD 775 million, equivalent to around RMB 5.2 billion1, rendering its leadership as one of the world’s largest Chinese government bond ETFs. Since inception in February 2014 till end of May 2022, 3199.HK has achieved a steady return as high as 33.26% in RMB term2, equivalent annualized return of 3.54%. As an ITCIS fund now, 3199.HK is eligible to offer investment opportunities of China’s fast growing onshore government bond market to meet demands from both MPF scheme members and the industry.
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The significance of China onshore market has become too important to ignore. With onshore market size at around USD 18 trillion, China’s bond market has become the second largest in the world, trailing just behind the U.S.3. The further opening-up of China’s onshore bond market presents attractive opportunities to global investors. According to historical data, the China onshore bonds offer a higher total return with a relatively lower return volatility compared to other major economies4. In addition, the low correlation between China onshore bonds and global bonds would potentially provide greater portfolio diversification for investors5. Worth mentioning, in the past few years, foreign investments continued to flow into China onshore market. As of April 2022, foreign institutions hold more than RMB 3.7 trillion (over USD 580 billion) of onshore Chinese bonds6. Albeit the enormous amount, which is five times more than that of 2015, the foreign holding percentage is just around 3.2%, implying severe underinvestment by global institutions. If fully included in the three major global fixed income indices, the Chinese onshore bonds are expected to attract about USD 320 billion of inflow in aggregation7. In anticipation of the upcoming full inclusion, it is deemed a good timing for investors to tap into the promising China onshore bond market. Taking into account all factors, Hong Kong’s Legislative Council has passed a regulation to allow MPF to invest in Chinese government bonds, which has already taken effect upon gazettal on June 2.
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CSOP, the most representative Chinese offshore asset manager, as well as an ETF leader in Asia, is known for its experiences and expertise in managing the Chinese government bond ETFs. Melody He, Deputy CEO of CSOP comments “. As the leading Chinese government bond ETF issuer in the region, CSOP manages the largest Chinese government bond ETFs in Hong Kong and Singapore respectively, bridging China onshore government bond market with investors in the region. The inclusion to ITCIS is another milestone of 3199.HK. We believe 3199.HK, a transparent investment tool with relatively low cost, easy access and diversified bond holdings will meet the MPF scheme members’ demand.”
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