The first Hong Kong-listed exchange-traded fund to be backed by shares listed in mainland China began trading yesterday.

China Asset Management’s ChinaAMC CSI 300 Index ETF is a RMB-denominated fund that invests in A shares via the renminbi qualified institutional investor (RQFII) quota recently launched by the Chinese government. This scheme allows renminbi raised offshore to be used to invest in mainland stocks.

The listing of the new ETF is significant because it will provide Hong Kong investors with the first opportunity to invest in a physically-replicated A share ETF that is renminbi denominated. The other 24 A share ETFs listed on the Hong Kong exchange all use synthetic replication and are traded in Hong Kong dollars.

“This is an important development to further strengthen HKEx’s position as a leading international market to trade RMB products by offering more direct access for Hong Kong and international investors to gain exposure to the mainland A-share market,” said Calvin Tai, HKEx’s head of trading.

Further launches of similar ETFs are expected E-Fund Management, Harvest and CSOP Asset Management in the near future.

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