CSOP to launch world's largest Chinese government bond ETF on SGX

SINGAPORE Exchange (SGX) announced on Thursday the listing of the world's largest Chinese pure government bond exchange-traded fund (ETF) that will meet the growing investor demand to access China's onshore bond markets.

Managed by CSOP Asset Management (CSOP AM), the institutional-grade ICBC CSOP FTSE Chinese Government Bond Index ETF has attracted investor interest with initial assets under management (AUM) of US$676 million at the end of the subscription period. The ETF will start trading on September 21, 9 am Singapore time.

The fund replicates the performance of fixed-rate government bonds issued in mainland China as measured by the FTSE Chinese Government Bond Index (CGBI). It was developed in partnership with ICBC Wealth Management and ICBC Asset Management (Global) as investment advisors.

According to the ETF prospectus, CSOP AM will adopt a representative sampling strategy for the fund.

The ETF marks CSOP AM's first listing on SGX, and is also the first ETF to utilise the new Variable Capital Companies (VCC) framework launched by the Monetary Authority of Singapore and Accounting and Corporate Regulatory Authority this year.

Loh Boon Chye, chief executive officer of SGX, said global fixed income investors have been turning to Chinese sovereign bonds for added diversification and yields, and the ETF is a strong addition to SGX's platform.

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"SGX will continue to work with issuers and business partners to develop a multi asset ETF product shelf that meets the demands of the investment community," Mr Loh said.

Ding Chen, CEO of CSOP AM, said the ETF has been designed to help capture the investment opportunities created by the booming China onshore bond market and its continuous inclusion in major global indices.

"We believe this China-themed fixed income ETF with relatively low cost, easy access and diversified bond holdings will suit the local investors' demand of seeking for a relatively stable yield," Ms Ding said. CSOP AM expects to launch more new products down the road.

The market turnover value of SGX-listed ETFs was S$4.1 billion in FY2020 ended June, up 70 per cent on year. Total AUM for all SGX-listed ETFs amounted to S$5.8 billion as at end-June.

SGX attributed the strong growth in its ETF market to the growing investor interest in yield-focused products such as fixed income and Reit ETFs, which make up 40 per cent of the ETF assets listed on SGX.