ETFs supporting development strategy, technology innovation

Exchange-traded funds, which were first introduced into the Chinese market 15 years ago, have grown into indispensable tools in the A-share market, serving the country's real economy development and transformation while connecting to the global capital market, said experts.

Liu Ti, deputy general manager of the Shanghai Stock Exchange, said at the 15th anniversary of the Chinese ETF market held on Friday that the increasingly enriched product portfolio of ETFs in the Chinese market has facilitated the country's economic transformation. ETFs targeting the Belt and Road Initiative, 5G and semiconductors have been introduced over the past few years to support the country's development strategy and technology innovation, he said.

As SSE calculated, there were more than 240 ETFs traded in the market by November, with the total market value exceeding 650 billion yuan ($92.5 billion). A total of 177 ETFs are traded at the Shanghai bourse. Since the beginning of 2017, the number of investors taking part in ETF trading has also surged more than five times to 2.6 million this year.

In addition, up to 13 cross-border ETFs have been listed at the SSE. The China-Japan ETF connectivity scheme was launched in June.

"As the A-share market is included in the global benchmark indexes such as the MSCI, the ETF will become an important tool for both domestic and overseas investors," said Liu.

The first ETF product－China 50－was launched by China Asset Management 15 years ago. Over time, the investment targets for ETFs have included stocks, bonds, currencies, gold and overseas assets.

According to Li Yimei, general manager of China Asset Management, while ETFs such as China 50 track the ups and downs of the leading A-share listed companies, they can work as the references for macroeconomic analysis and investment decisions.

"ETFs have great potential in China since they can lead investors to long-term investment and value investment, which is crucial to the market's sustained development at a time when China's capital market is carrying out a deepened two-way opening-up," she said.

Zheng Fushi, deputy director of the Asset Management Association of China, said that ETFs have maintained robust growth worldwide over the past few years, serving as an important driving force of the US, European and Asia-Pacific securities markets. By the end of October, more than 6,900 ETFs were traded worldwide, with the total asset value amounting to $5.79 trillion.