– This is the script of CNBC's news report for China's CCTV on July 29, Wednesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Chinese asset manager GF International Investment Management Ltd launched an exchange-traded fund (ETF) tracking the MSCI China A International Index today.
It is the first ETF in Asia to track the index, which is composed of China A-shares and was launched in June last year as a precursor to the inclusion of A-shares in MSCI's influential Emerging Markets Index.
Overview of GFI MSCI China A International ETF
RMB counter: 83156
HKD counter: 03156
Expected Listing Date 29 July 2015
Underlying Index: MSCI China A International Index
Exchange Listing: Hong Kong Stock Exchange
Fund Manager and RQFII Holder: GF International Investment Management Limited
Trading Lot Size
RMB counter: 200 units
HKD counter: 200 units
Importantly, the ETF's expense ratio is at 0.80% per annum, compared with the average of above 1.12% for the A-share ETFs listed globally.
The ETF is physical in nature and is designed to closely represent the investment opportunity of China's A-share market.
The MSCI China A International Index tracks the portion of A-shares that are accessible to international investors, and it captures the A-share component of the MSCI China All Shares Index.
The new index expands MSCI's family of indexes covering China's equity markets. It is constructed using the MSCI Global Investable Market Indexes Methodology.
With no fixed number of index constituents, the free-float adjusted market capitalization weighted MSCI China A International Index is able to more readily reflect ongoing market expansion.
The ETF is tradable in the same time zone as the market it tracks and gives investors the flexibility to add exposure at their own pace ahead of the inclusion of A-shares in the MSCI Emerging Markets Index, which many observers expect will happen in the near future.
Azra Lau, head of exchange-traded funds at GF International Investment Management, discusses the listing of the GFI MSCI China A International ETF in Hong Kong with us.
[AZRA LAU, GF International Investment Management, Head of ETF] "Couple of things haven't changed. The Chinese market is still the second biggest economy in the world, foreign participation is still under 2%, and the government is still committed to opening up the markets, so i will happen. And of course we would like to see it happen sooner than later, but it's something that the investors should get themselves prepared for it. That's why we are launching this ETF, to get investors ready and help them get ahead."
However, some analysts are concerned that Chinese markets' recent volatility will make the MSCI postpone the inclusion of A-shares to its EM index.
[WILLIE CHAN, Maybank Kim Eng Securities, Asia Regional Strategist] "I THINK MSCI WILL DELAY THE A-SHARE INCLUSION UNTIL MAYBE NEXT YEAR, HONESTLY BECAUSE AFTER ALL THESE MEASURE I THINK MSCI NEED TO CONTINUE TO MONITOR A BIT MORE ABOUT WHAT WILL HAPPEN NEXT...BECAUSE RIGHT NOW THERE ARE STILL SOMETHING PEOPLE NEED TO MONITOR ITS WHEN CHINA WILL EXIT THE HOLDINGS I THINK IT MIGHT TAKE FEW YEARS"
Meanwhile, another good news for the RMB, the Chinese currency.
The London Metal Exchange, the world's oldest metals exchange, says it can now accept the offshore version of the Chinese currency as collateral to underpin trades at its clearing house.
Trevor Spanner, Chief Executive of LME Clear, the clearing house, said that the renminbi is on its way to becoming one of the world's most widely used currencies, and he's pleased to be able to help our members take advantage of the opportunities arising from the renminbi's internationalisation.
But still, internationalisation of both the RMB and the A-shares will have a long way to go.
CNBC's Qian Chen, reporting from Singapore.
AS THE FEDERAL RESERVES BEGINS ITS TWO-DAY JULY MEETING, WALL STREET STILL LOOKS FOR A RATE HIKE IN SEPTEMBER. BUT ITS CONVICTION IS SLIPPING.
THE LATEST CNBC FED SURVEY FINDS JUST OVER HALF OF THE 35 RESPONDENTS FORECASTING THE FIRST RATE HIKE IN 9 YEARS TO COME IN SEPTEMBER, BUT THAT'S DOWN FROM OVER 60% IN THE PRIOR SURVEY.
THE GROWING CONCERN: WEAK OVERSEAS GROWTH, A US JOB MARKET WHERE MANY STILL CAN'T FIND AS MUCH WORK AS THEY'D LIKE AND CONTINUED LOW INFLATION IN THE US.
[Alfred Broaddus, Fmr. Richmond Fed President] "The key thing is that many people on the FOMC, as you well know, need to be pretty confident that the inflation rate is going to begin at some point in the not too distant future to move back up toward the 2% target. So if the wage data and the labor market reports were weak I think that could affect pushing liftoff back."
TO BE SURE, 82 PERCENT SAY THE FED WILL HIKE THIS YEAR, BUT THAT'S DOWN FROM 92 PERCENT IN THE PRIOR SURVEY.... IF NOT IN SEPTEMBER, THE SECOND CHOICE ON WALL STREET IS FOR A DECEMBER HIKE.
RESPONDENTS STREET STILL ANTICIPATE BETTER GROWTH NEXT YEAR BUT WITH A BIT LESS EXUBERANCE. GROWTH ESTIMATES SLIPPED TO 2.7 PERCENT IN 2016, THE FOURTH STRAIGHT DECLINE IN THE SURVEY. FOR 2015, GROWTH WAS NUDGED UP A BIT TO 2.4 PERCENT.
BEHIND THE MORE PESSIMISTIC OUTLOOK IS CONCERN ABOUT GLOBAL ECONOMIC WEAKNESS, WHICH TOPS THE SURVEY FOR THE FIFTH STRAIGHT TIME AS THE BIGGEST THREAT TO THE U.S. RECOVERY SUGGESTING TO SOME THE FED SHOULD DELAY RATE HIKES.
[Sri Kumar, Sri-Kumar Global Associates] "You have a serious crisis both in China and continuing crises both in Europe and Greece and this is no time to do that. Because if they did the dollar is going to go through the roof. You're going to see that cross parity with the Euro in that case and US exports simply cannot take it."
THE PROBABILITY OF RECESSION IN THE NEXT YEAR ROSE SLIGHTLY BUT IS STILL LOW BY HISTORICAL STANDARDS.
STOCK MARKET BULLS ARE STILL WINNING OUT ON WALL STREET, BUT THEY HAVE TEMPERED THEIR OPTIMISM. THEY NOW LOOK FOR 3% GAINS IN THE S&P THIS YEAR, AND 9% IN 2016, BOTH DOWN FROM THE JUNE SURVEY.
SO LAST CALL ON ZERO INTEREST RATES FROM THE FED IS STILL COMING, BUT WALL STREET THINKS CLOSING TIME COULD BE A LITTLE LATER.
STEVE LIESMAN, CNBC BUSINESS NEWS IN WASHINGTON.
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