Foreign institutional investors have been increasing their exposure to A-share ETFs, signaling a growing confidence in China's equity marketsThis trend has gathered momentum throughout the year, particularly in the turbulent landscape of investment opportunities available in China.
As of November 17, the performance of ETFs in 2023 has been noteworthy, with 15 ETFs reporting annual returns exceeding 20%—seven of which have topped 40%. Leading these high performers are ETFs focused on sectors such as technology and media, showcasing considerable foreign investment interest.
In the second half of the year, prominent foreign entities like Allianz Life Insurance, UBS, and Barclays have notably intensified their investments in ETFsHistorically, Barclays has emerged as a particularly active player, holding stakes in multiple ETFsOther foreign participants making waves in the ETF investment scene include HSBC, Morgan Stanley International, and Nomura, illustrating a robust foreign commitment to the Chinese capital markets.
Numerous high-performing ETFs are now prominently held by these foreign investors, underlining their strategic interest in this sector.
Recent market analyses have highlighted the effectiveness of foreign strategies in the ETF domain, with several ETFs reporting annual gains surpassing 20%—proof of the efficacy of their investment decisions.
The Huaxia NASDAQ-100 ETF stands out with an impressive year-to-date increase of 50.7%, leading its category and reflecting strong foreign interest, particularly from Barclays, which has accumulated approximately 113 million units, representing 7.84% of its total holdings as of the second quarter.
Following closely is the HFT NASDAQ-100 ETF, which boasts a stellar annual return of 48.52%, with Barclays again featuring as a significant player, holding 3.18% of shares
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Notably, this ETF's top ten holders also included RQFII Jianjie Hong Kong, demonstrating the diverse foreign interest in these investment vehicles.
Another top performer, the GF NASDAQ-100 ETF, reported an annual gain of 47.77%. Their half-year report illustrates the stature of Barclays and Merrill International as second and third-largest shareholders, holding 5.56% and 3.04%, respectively, representing 1.128 billion and 618 million sharesHSBC also held 1.68% of the total shares.
The trend of foreign investment extends to other high-performing ETFs as wellFor instance, Barclays holds 4.85% of the GKG NASDAQ-100 ETF, securing the top position among its shareholdersThe Bank also holds a staggering 10.32% of the Huatai-PB Zhongzheng Korea Exchange Semiconductor ETF, reinforcing its strategic position in this specialized market.
Moreover, Nomura Singapore has maintained a 3.29% share in the Huaxia S&P 500 ETF, while Morgan Stanley and Barclays hold 17.76% and 2.04% respectively in the Guotai S&P 500 ETF, reflecting a powerful foreign interest across the boardAllianz Life Insurance also holds a 2.03% stake in the E Fund Zhongzheng Cloud Computing and Big Data ETF.
The steady demand for new ETFs continues to attract foreign capital.
Data shows that foreign institutional activity in China's ETF market has surged in the latter half of the year, with several newly launched ETFs attracting significant investment from international top-tier institutions.
For example, the E Fund Shanghai Stock Exchange STAR Market 100 ETF, established on November 8, has seen Allianz Life Insurance emerge as the largest shareholder, holding 5.44 million units, amounting to a 1.21% stake.
Similarly, the Huaxia Zhongzheng Hong Kong Stock Connect Mainland Financial ETF, launched on September 25, garnered attention from UBS and Barclays
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UBS held 20 million units, making up 34.52% of the shares, while Barclays owned 10 million units, constituting 17.26%, together accounting for a significant portion of the top three holders.
On September 7, the Bosera STAR Market ETF emerged, with Barclays also acquiring 10 million shares, placing it among the top ten shareholders.
An insider related to ETFs in Shanghai remarked that the surge in activity by foreign institutions within China's ETF market demonstrates robust interest in A-share passive equity productsHe noted that these institutions are not solely focused on the themes they are normally comfortable with but are also enthusiastically participating in popular investment opportunities within technology sectors of A-shares.
Barclays takes the lead as foreign interest in A-share ETFs continues to grow.
As of mid-year, several renowned foreign institutions had already become significant shareholders in A-share ETFs.
Specifically, Barclays holds a staggering 1.238 billion units in the GF Zhongzheng Overseas China Internet 30 ETF, giving them a commanding 15.33% share—setting a benchmark for foreign participation in A-share ETFs.
Additionally, Barclays has amassed 32.6 million shares in the CMZ Zhongzheng Hong Kong Technology ETF, reflecting a 31.17% holding, placing them firmly at the top among shareholders, which displays their concentrated investment approach in thematic ETFs.
Notably, in the first half of the year, Barclays significantly increased its stakes in the Yinhua Zhongzheng Hong Kong Stock Connect Consumption ETF by over 16%, while also boosting its holdings in the GF NASDAQ-100 ETF by a substantial 1.078 billion units.
Clearly, Barclays stands out as the most aggressive foreign institution in terms of A-share ETF holdings
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