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

CSOP Asset Management has debuted its first ETF - ICBC CSOP FTSE Chinese Government Bond Index ETF in Singapore in partnership with ICBC Asset Management.

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, the firm reported in a press release.

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 Chinses 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 US. 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 yield with a relatively lower exchange rate volatility compared to other major economies, says CSOP. In addition, the low correlation between China onshore bonds and global bonds would potentially provide greater portfolio diversification for investors. 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 underinvested by global institutions, reports CSOP.

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. 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, 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.”

Gu Jian’gang, Chairman, 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!”

Gao Ming, Chairman and Executive Director, ICBC (Asia), said: “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.”

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, reports the firm.

Zhou Yi, Chairman, CSOP Asset Management Limited, said: “We are very glad to bring our first SGX listed ETF product to global investors. CYB/CYC is designed to help capture the investment opportunities brought by the booming China onshore bond market in view of the market discussion of the potential inclusion into the global indices.”

Ding Chen, CEO, CSOP Asset Management, said: “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.”