Lion Global Investors and OCBC Securities list Singapore's first China focused dividend-pay ETF
Lion Global Investors and OCBC Securities will list Lion-OCBC Securities China Leaders ETF on the Singapore Exchange (SGX) on 2 August 2021. This is Singapore’s first China-focused ETF that will pay out annual dividends to investors.
It is the second Exchange Traded Fund (ETF) listed by Lion Global Investors and OCBC Securities after the launch of the Lion-OCBC Securities Hang Seng TECH ETF in December 2020. This comes amid a growing interest among investors in ETFs and China equities.
The Lion-OCBC Securities China Leaders ETF allows investors to diversify their investment portfolio through the inclusion of Chinese stocks in an easy and affordable way.
OCBC Securities also saw a surge in its investors’ interest in ETFs, with retail customers’ trading volume in 2020 already more than double that of 2019. The combined Assets under Management (“AUM”) of all ETFs listed in Singapore grew 57 per cent in 2020 compared to the previous year, based on SGX data. The total AUM grew a further 12 per cent in the first six months of 2021.
The Lion-OCBC Securities Hang Seng TECH ETF, released late last year, tracks the Hang Seng TECH Index - which is made up of the top 30 technology companies listed in Hong Kong by market capitalisation that have high business exposure to technology themes. The Lion-OCBC Securities Hang Seng TECH ETF crossed S$220 million in AUM within six months. Among the 18 equity ETFs currently listed in Singapore, the Lion-OCBC Securities Hang Seng TECH ETF attracted the highest inflows in the first half of 2021.
The Lion-OCBC Securities China Leaders ETF will track the Hang Seng Stock Connect China 80 Index, which comprises the top 80 largest Stock Connect eligible Chinese companies listed in either Shanghai, Shenzhen and Hong Kong by market capitalisation.
The new ETF’s Initial Offering Period (IOP) starts on 12 July 2021 and ends on 28 July 2021. It will list on the SGX on 2 August 2021 and will be available in both Singapore dollar (SGD) and Renminbi (RMB) denominations.
Providing investors easy access to tap into the growth potential of the 80 largest Stock Connect eligible Chinese companies
With the global economy heavily impacted by the on-going pandemic, China was the only major economy to see positive growth in the world last year. Based on estimates by the International Monetary Fund, the Chinese economy is expected to grow by 8.4% in 2021 and 5.6% in 2022 – higher than the projected global growth of 6% in 2021 and 4.4% in 2022.
In terms of market capitalisation, China’s stock market (from both Shanghai and Shenzhen combined) is the second largest in the world, standing at US$12.2 trillion as of 31 Dec 2020. Just last year, Shanghai Stock Exchange recorded the highest number of initial public offerings globally at 234 launches, followed by NASDAQ at 184 launches and Shenzhen Stock Exchange at 161 launches. And for the first time, there are more Fortune Global 500 companies based in China and Hong Kong than the US in 2020 – 124 in China and Hong Kong vs 121 in US. According to the Centre for Economics and Business Research, China is poised to overtake the US as the world’s largest economy in 2028.
China’s equity market has historically been difficult for investors outside the country to access. China A-Shares are vastly under-represented in global indexes. While the United States has a weight of 57.3% in the MSCI All Country World Index, China only has a weight of 5.2%.
In the last three years, OCBC Securities has seen a growing interest in the Chinese market among investors. The year-to-date trading volume of China equities among OCBC Securities customers has grown by more than 75.4% in 2020 compared to 2019.
Growing investments in Exchange Traded Funds
The Lion-OCBC Securities China Leaders ETF is classified as an Excluded Investment Product (EIP), an investment product that is less complex and more easily understood by retail investors unlike some ETFs which are classified as Specified Investment Products (SIP) which require investors to go through Customer Account Review (CAR) and only qualified investors can invest in.
Upon listing, the new ETF allows investors to buy much smaller lot sizes of just 10 units at one time. This feature makes investing into the ETF particularly attractive to younger and newer investors who can start at S$2.00 per unit, based on issue price, excluding commissions and fees.
Mr Wilson He, Managing Director of OCBC Securities, said: “In today’s world, we cannot deny the decisive role China plays in the global economy and in re-shaping the business landscape. The way China influences the global economy is multi-faceted and China's rise provides a good opportunity for customers to ride this wave of growth. Given the success of our first ETF launch last year, it’s a clear indication that customers are looking for more ways to expand their investment portfolio in a more calibrated manner. We are confident that Lion-OCBC Securities China Leaders ETF will be an attractive proposition to those who are looking to diversify their portfolio to include China stocks.”
Mr Gerard Lee, Chief Executive Officer at Lion Global Investors, said: “The merits of investing in China are beyond doubts, made more so by geopolitical events of the last few years. As a result, investors now have a much better understanding of what leading Chinese companies can offer owing to extensive coverage by the media. Typically, most investors express their bets on China via commingled funds, ETFs listed in Hong Kong or direct stock purchase. Our last ETF listed in December 2020, Lion-OCBC Securities Hang Seng TECH ETF, demonstrated the keen demand for a Singapore-listed ETF even when such products are available elsewhere. With this positive experience, we are confident that the forthcoming Lion-OCBC Securities China Leaders ETF will be warmly received.”
How to invest in the Lion-OCBC Securities China Leaders ETF
The Initial Offering Period will open on 12 July 2021 and close on 28 July 2021. The Issue Price of each unit during the Initial Offering Period is S$2.00.
During the Initial Offer Period, investors may subscribe to the ETF through the Participating Dealers – OCBC Securities, iFAST Financial, Phillip Securities, Tiger Brokers Singapore, UOB Kay Hian and CGS-CIMB Securities. Investors can also invest in the ETF through OCBC Bank’s ATMs and Internet Banking from 12 to 26 July 2021 with an application fee of S$2.00 only, regardless of investment amount.
Once the ETF is listed on SGX on 2 August 2021, investors will be able to trade through their brokers and respective trading platforms.
Investors can trade in SGD or RMB, using either cash or Supplementary Retirement Scheme (SRS).
 Refers to the underlying securities of the Hang Seng Stock Connect China 80 Index