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CSOP debuts the world’s largest Chinese pure government bond ETF in Singapore

2020-09-18 12:10:00

ICBC CSOP FTSE Chinese Government Bond Index ETF will list (ticker: USD counter:CYB/ SGD counter:CYC) on Singapore Exchange (“SGX”) on September 21 2020
CYB/CYC to directly invest into China onshore government bonds, aiming to help capture opportunities brought by China’s bond inclusions into global indices
China onshore bonds market to present attractive opportunities to local investors

SINGAPORE--()--CSOP Asset Management Pte. Ltd. debuts its first ETF - ICBC CSOP FTSE Chinese Government Bond Index ETF (ticker: USD counter: CYB/ SGD counter: CYC) in Singapore in partnership with ICBC Asset Management.1 Operating since April 2019, CSOP Asset Management is bringing its leading expertise and experience in ETF management to investors in Singapore. The CYB/CYC offers the opportunities for investors to access the fast growing China onshore bond market. CYB/CYC will adopt a representative sampling strategy to replicate as closely as possible the performance of the FTSE Chinese Government Bond Index to achieve its investment objective. Denominated in RMB, CYB/CYC can be created and redeemed in both USD and RMB in primary market. Post listing, the CYB/CYC trades in both USD and SGD at board lot size of 10 shares. As the first SGX-listed ETF investing directly in China onshore bond market, CYB/CYC has attracted a number of institutional investors and USD675, 571,000 investment, marking it one of the ETFs with a significantly large initial size on SGX,and also the world’s largest Chinese pure government bond ETF.

China onshore market has become too important to ignore. The size of China bond market has already reached USD15 trillion, the second largest bond market in the world, trailing behind US2. With China’s onshore bond market further opening up, it presents attractive opportunities to global investors. Historical data suggested that the China onshore bonds offer a higher yield3 with a relatively lower exchange rate volatility compared to other major economies.4 In addition, the low correlation between China onshore bonds and global bonds would potentially provide greater portfolio diversification for investors.5 Worth mentioning, in the past few years, foreign investment continued to flow into China onshore market. Even though foreign institutions held more than CNY2.8 trillion (over USD400 billion) of onshore Chinese bonds as of August 2020, which was four times more than the amount held in 2015, the foreign holding of China onshore bonds was still below 3% severely under invested by global institutions.6 If the Chinese onshore bonds are included in the three major global indices, it is expected to attract about USD320 billion of inflows into China onshore bond market in aggregate.7 The market discussion on the upcoming announcement by FTSE Russell on the potential inclusion of China onshore bonds reflects optimism and its readiness to be included in foreign investors’ asset allocation. In anticipation of the upcoming announcement from FTSE Russell on highly possible inclusion of China onshore bonds, it is deemed a good timing for investors to tap into the China onshore bonds market.

Loh Boon Chye, Chief Executive Officer of SGX, said, “We are honoured that CSOP Asset Management, a well-known ETF leader in Asia, has picked SGX to be the listing venue of choice for their landmark ETF. SGX provides a multi-asset platform that supports the internationalisation of China and investor access to Asia’s largest economy. Global fixed income investors have been turning to Chinese sovereign bonds for added diversification and yields, and this product is a strong addition to our platform. 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. Gu Jian’gang, Chairman of ICBC Wealth Management said “We are glad to cooperate with leading business partners like CSOP to continuously provide high-quality services to global investors! I hope ICBC CSOP FTSE Chinese Government Bond Index ETF listed on SGX will contribute to the internationalization of RMB and the development of Singapore's offshore RMB market. China’s financial market is continuously opening and it welcomes global investors. We look forward to a win-win cooperation with all parties! “

“I am confident that the ICBC CSOP FTSE Chinese Government Bond Index ETF will offer global investors an efficient and competitive investment tool for their asset allocation on Chinese government bonds. As one of the major participants of the ETF, ICBC (Asia) will continue to deliver high-quality asset management solutions globally.” Commented by Ms. Gao Ming, Chairman and Executive Director of ICBC (Asia) Ltd.

CSOP Asset Management Limited, the parent company of CSOP Asset Management Pte. Ltd., best known as the first Chinese offshore asset manager as well as an ETF leader in Asia is confident on the listing of CYB/CYC. Mr. Zhou Yi