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Markets · ETF
China and Japan complete agreement for cross-listing of ETF products
2019/04/24 07:34:57
Shanghai Stock Exchange; Japan Securities Group; Exchange traded funds; cross listing

Apr 24, 2019 (China Knowledge) - China’s Shanghai Stock Exchange has signed an agreement with Japan Securities Group to allow cross-listing of ETF products on the exchanges of both countries, signaling another step forward by China in the opening of its financial markets.

The agreement which was signed during the Sino-Japanese capital market forum held in Shanghai on Monday will allow qualified institutional investors in both countries to set-up cross-border funds to invest in ETF products in either country.

According to the China Securities Regulatory Commission (CSRC), four Chinese asset management companies have already sent in applications to establish ETFs to track Japan’s benchmark securities indices.

Japanese assets currently account for just a fraction of investment conducted through the Qualified Domestic Institutional Investor (QDII) scheme which allows domestic institutional investors who have met certain criteria to invest in securities outside of China.

As of end 2018, only 13 QDII funds had invested in Japanese assets with a total market value of RMB 77 million, representing less than 10% of the net value of all funds.

The new ETFs will allow investors in both markets to better diversify their portfolios as currently there are few products targeted at the Japanese market in China.

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