Lyxor plans China Government Bond RQFII ETF

Lyxor announces it has been awarded by S&P Dow Jones Indices (S&P DJI) a license on the S&P China Sovereign Bond 1-10 Year Spread Adjusted Index, in order to launch and list a China Government Bond ETF in Europe.

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The S&P China Sovereign Bond 1-10 Year Spread Adjusted Index comprises Government Bonds issued by the People’s Republic of China, having an outstanding maturity between 1 and 10 years and traded on the Shanghai or Shenzen Stock Exchanges as well as on the Chinese Interbank Market.

The index currently represents a yield to maturity of 3.2% in Renminbi for an average duration of 4.2 years [1].

While China is the second largest world economy and has the third largest bond market worldwide, the access to its bond market is still restricted for foreign investors. “The progressive liberalisation of China’s financial market has offered greater accessibility and flexibility to international investors looking to invest in the world’s second largest economy,” comments Heather McArdle, Director of Fixed Income Indices at S&P Dow Jones Indices. “As European investors increasingly look for China exposure beyond equities, we are excited to license the S&P China Sovereign Bond 1-10 Year Spread Adjusted Index to Lyxor to help bring China government bonds into their toolkit and facilitate portfolio diversification for investors.”

Thanks to the 6 billion CNY RQFII (onshore Renminbi) [2] quota recently granted by the State Administration of Foreign Exchange (SAFE), Lyxor is now able to plan the launch of a new UCITS ETF. The ETF will be sub-managed by the Hong-Kong subsidiary of Lyxor’s Chinese joint-venture Fortune SG.

Lyxor already offers a wide range of ETF solutions to invest in the domestic China equity markets through the Lyxor Fortune SG UCITS ETF MSCI China A (DR) and the Lyxor UCITS ETF CSI 300 A-Shares. Lyxor additionally offers the largest ETF in Europe [3] exposed to Chinese companies listed in Hong-Kong through the Lyxor UCITS ETF China Enterprise (HSCEI).

Next Finance , June 2015

Article also available in : English EN | français FR

Footnotes

[1] Source: Bloomberg, as of 29th May 2015

[2] Renminbi Qualified Foreign Institutional Investor

[3] Source: Bloomberg, as of 29th May 2015

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