(Shanghai Daily)
Updated: 2007-07-19 09:10

China's mainland is planning to unveil exchange-traded funds to track the nation's broadest blue-chip stock index, which is also the underlying gauge of the proposed first mainland index futures, China Securities Index Co said yesterday.

Several domestic money managers are preparing for funds that will invest in member stocks in the CSI 300 index, which groups the biggest 300 mainland-traded firms by value, the index developer said in a statement.

On Tuesday, the Hong Kong stock market embraced the first ETF based on the CSI 300 barometer, which was launched by BOC International and Prudential Asset Management.

The ETF invests in yuan-backed stocks through Deutsche Bank, which has a Qualified Foreign Institutional Investor license under the mainland arrangement to let overseas companies take part in its capital market.

"The launch of ETF products based on the CSI 300 index will set the stage for arbitrage trade between the funds and upcoming futures," China Securities Index said. "The frenzy to develop such ETFs is high among mainland fund managers and it won't be long before the products debut."

China's financial authorities are striving to push forward the mainland's first stock-index futures contracts by the end of the year after postponing the move several times due to technical and market-sentiment concerns.

Industry analysts expected the futures launch to come as early as September after the stock watchdog grants trading licenses to brokerages, and wraps up a year-long investor education campaign.

China's mainland market had 19 index-linked funds with a combined market value of 122.9 billion yuan (US$16.3 billion) by the end of June.