The first event for WE EMEA held at the London Stock Exchange and hosted by FTSE Russell was well attended by over 60 people.
Deborah Fuhr opened the event and gave an overview of the History of ETFs & China covering the growth of China’s economy, economic size and the current quota systems that are in place with Qualified Institutional Investor ("QFII") program and the Renminbi Qualified Institutional Investor ("RQFII"). Followed by an overview of the alphabet soup of market listings - different types of shares, trading with different agents in different locations and the growth of ETFs since the first ETF in offering China exposure launched in 2001. By 2020 China wants to be a Global Financial center and to meet this target will need to continue with reforms for inclusion in Global indexes.
Deborah Fuhr moderated a panel of speakers including representatives from FTSE Russell, MSCI and S&P Dow Jones. The panelists gave an overview for the Inclusion in indices session of their review process and the conditions for eligibility in Global and Emerging indexes, as well as their definition of an Emerging Market and touching upon their view on the government intervention. Penny Ning Pan from FTSE Russell gave an insightful view on China, that the inclusion of China A in the FTSE Emerging market index could double the weight of China with a total weight of over 50% of the whole index. Deborah Yang from MSCI gave an overview of the path for inclusion of China in the MSCI EM index but this is a longer term outlook until there are further reforms in China. Haw-Yan Man gave the overview from S&P Dow Jones who have a number of China specific indices but at present China are not including in the Global and Emerging indexes.
Following from the index panel was Implementation in ETFs panel session, moderated by Jo McCaffrey. Jasmine Stein from Deutsche Asset Management and Mandy Chiu from ETF Securities discussed some of the challenges of implementing products in a restricted market. Following this they described their partnership with Harvest (Deutsche Asset Management) and E Fund (ETF Securities) to gain access to the local market and looking forward the potential for fixed income products.
Ian Cohen from HSBC gave an overview on Beneficial ownership / trading and custody touching upon the evolving barriers of international investment including doubts over legal title and likely prohibition from regulators. He discussed the introduction of circuit breakers early 2016 and if the levels at which they are set are within the threshold of what could be considered ‘normal volatility’. Ian finished on the idea of the possibility of an LSE/China Connect mechanism and some of the challenges of such a stock trading link.
Catherin Weeks from Simmons and Simmons provided a summary of the considerations of Mutual recognition for northbound and southbound funds. Catherine covered eligibility requirements, application process, distribution and disclosures as well as ongoing compliance. Following the overview there was a Q&A session moderated by Jo McCaffrey.
Lastly was the view from Investors. Deborah Fuhr moderated a panel discussion with Liane Evans from Nutmeg and Irene Bauer from Twenty20Investments. The panel covered a number of areas covering the potential currency depreciation in China, considerations for Investors who wish to gain exposure to China and effect of the property bubble. It is not an exposure that either offer to clients at point in time and a survey by Ian of those in the room with personal investment in China seemed in line with this – few hands were raised!
Deborah Fuhr gave closing comments followed by a networking session in the LSE atrium.
Thank you to everyone who joined us!