Hong Kong’s CSOP AM sets sights on South Korea’s retail ETF market
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Hong Kong’s CSOP Asset Management is seeking approval from South Korea’s financial authorities to sell its exchange traded funds to the country’s retail investors, in a move that would see it become the first Chinese firm to step into the local ETF space.
CSOP AM, a Hong Kong-based subsidiary of China Southern Asset Management, has submitted applications to South Korea’s Financial Supervisory Service to register five ETFs.
It plans to launch the CSOP FTSE China A50 ETF, CSOP SZSE ChiNext ETF, CSOP Hang Seng TECH Index ETF, ICBC CSOP S&P New China Sectors ETF and ICBC CSOP FTSE Chinese Government Bond Index ETF managed by CSOP Singapore.
“These five ETFs were selected based on the demand we have seen from Korean investors in the past and the uniqueness of products available in the Korean ETF market,” said Ding Chen, chief executive of CSOP AM.
South Korea offers CSOP AM an opportunity to tap a rapidly growing market. It had around 630 ETFs with assets of around Won77.3tn ($56.3bn) in early November, a significant increase on the Won13.4tn held in about 130 funds in 2012, exchange data show.
CSOP AM’s decision to enter South Korea’s competitive ETF market is unusual, experts said.
“It is rare for foreign managers to bring in a fund listed overseas for retail investors,” said Hwang Sei-woon, a research fellow at the Korea Capital Market Institute.
Park Seung Jin, a Seoul-based senior analyst at Hana Securities, said the move faced challenges because the CSOP AM brand name was unfamiliar to most retail investors.
South Korean investors have no shortage of existing China-focused ETFs to choose from, although they are all managed by domestic investment companies.
Nearly 40 China-themed ETFs were listed on the Korea Exchange as of Friday, exchange data show.
Investors can also purchase China-listed funds through the Hong Kong-China ETF connect, and a new ETF link-up connecting South Korea’s stock exchange with Shanghai’s bourse is in the works.
CSOP AM has already built some brand recognition with non-retail investors, who can access ETFs listed overseas via brokerages, in the South Korean market over the past five years.
Since 2017, the firm has been selling and marketing four ETFs to professional investors in South Korea, including the CSOP FTSE China A50 ETF, CSOP SZSE ChiNext ETF, CSOP Hang Seng TECH Index ETF and CSOP CSI 500 ETF.