Eight ETFs from six issuers — including Huatai Yingke, GF International, Dacheng International, Fullgoal Hong Kong, Haitong International and Hang Seng Investment — began trading on the Hong Kong Stock Exchange on September 28, making it the busiest single day for ETF listings on the exchange this year. Market participants joked that the gong used for the listing ceremony would soon be throwing off sparks. Among the eight ETFs, all but the Hang Seng AI Evolution ETF are "60/40" cross-market products.

Thanks to a July 2024 adjustment to the eligibility criteria for Stock Connect ETF inclusion, "60/40" ETFs have developed rapidly. Wind data shows that as of September 28, there were as many as 27 "60/40" ETFs listed on the Hong Kong Stock Exchange, of which seven have already been included in ETF Stock Connect. This type of ETF can invest up to 40% of its funds in international assets, helping investors gain exposure to overseas assets and global themes while investing in the Hong Kong market through ETF Stock Connect.

Industry participants noted that the concentrated issuance of "60/40" ETFs at the end of September reflects many asset managers' aim to capture the "inclusion window" at the end of March next year. Under regulatory requirements, Hong Kong ETFs that have been listed for six months, whose underlying index has been published for one year, and that meet size and liquidity thresholds can be added to Stock Connect. Stock Connect ETFs are reviewed every six months, with assessment cutoff dates at the end of March and September each year.

Huatai Yingke, GF International, Dacheng International and Fullgoal Hong Kong Roll Out New Products

The eight ETFs that listed on the Hong Kong Stock Exchange simultaneously each have distinct features, with the seven "60/40" ETFs issued by the Hong Kong subsidiaries of mainland asset managers drawing particular attention. The HKEX Korea Exchange Semiconductor Index ETF listed by Huatai Yingke is the first product from Huatai PineBridge's Hong Kong subsidiary Huatai Yingke. The HKEX Korea Exchange Semiconductor Index it tracks has about 60% weighting in Hong Kong-listed companies eligible for Stock Connect and about 40% in Korea Exchange-listed companies, making it a "60/40" ETF variety that is currently much in focus.

Industry observers said Huatai Yingke's push into Hong Kong-Korea semiconductors was unsurprising, given that its parent Huatai PineBridge manages the only China-Korea semiconductor ETF onshore, which as of September 24 had reached 11.66 billion yuan in size despite QDII quota constraints, with a year-to-date return of 82.04%. Notably, the index is the first jointly branded index between the Hong Kong Stock Exchange and the Korea Exchange. Huatai Yingke and Boshi International were among the first to receive authorization for the index, and Boshi International's ETF already listed on September 24.

GF International launched two ETFs at once: the GF HKEX Technology and US Technology 100 ETF and the GF MSCI Global Strategic Metals ETF, targeting Hong Kong-US technology and global strategic metals respectively. The GF HKEX Technology and US Technology 100 ETF is the first product to track the HKEX Technology and US Technology 100 Index, whose Hong Kong portion covers technology themes such as artificial intelligence, biotechnology and pharmaceuticals, electric vehicles and smart driving, internet and robotics, reflecting diverse technology application scenarios, while the US portion covers large technology companies listed on the Nasdaq. The GF MSCI Global Strategic Metals ETF listed the same day is positioned around "multi-metal exposure and cross-market allocation." It tracks the MSCI Global Strategic Metals Select Index, which selects companies with exposure to the metals and mining industry from eligible Hong Kong-listed and global market stocks to reflect the performance of relevant listed companies.

The Dacheng Galaxy HKEX Bursa Malaysia Large Cap ETF listed by Dacheng International is also a pioneer. The index was jointly launched on March 27 this year by HKEX Index Company Limited and the index business arm of Bursa Malaysia, making it the first jointly branded index between the two exchanges. It covers 60 large listed companies across the two markets, with 30 constituents each from Hong Kong and Malaysia, though Hong Kong-listed companies carry 60% weighting. It selects the largest and most liquid companies, spanning sectors including technology, finance, telecommunications, energy, consumer and healthcare.

Xiao Jian, deputy general manager of Dacheng Fund and general manager of Dacheng International, said the Hong Kong and Malaysia large caps covered by the Dacheng Galaxy HKEX Bursa Malaysia Large Cap ETF hold unique strategic value in Asia's cross-border capital flow landscape. The international competitiveness and deep liquidity of the Hong Kong market complement Malaysia's solid endowments in pillar industries such as banking, finance and utilities. This cross-market structural allocation focused on stable returns and the financial mainline provides solid support for the product's growth.

The Fullgoal Hang Seng Hong Kong-US Robotics ETF listed by Fullgoal Hong Kong is a sector-themed ETF tracking the Hang Seng Hong Kong-US Robotics Theme Index, covering 40 Hong Kong or US listed companies whose businesses are related to the robotics theme, with constituents including Woan Robotics, Nvidia, Tesla and Alphabet.

Haitong International also listed two "60/40" ETFs: the Guotai Haitong Global Future Technology ETF and the Guotai Haitong Global Strategic Resources ETF. In addition, the Hang Seng AI Evolution ETF issued by Hang Seng Investment tracks the Hang Seng Artificial Intelligence Theme Index, all of whose constituents are Hong Kong-listed companies.

September has become a dense "harvest period" for ETF listings on the Hong Kong Stock Exchange. Previously, several ETFs listed, including Mirae Asset's Global X Copper Miners ETF and Global X KOSPI 200 ETF, CSOP's Solactive Asia AI Bottleneck Index ETF and CSOP Hang Seng Premier Technology Index ETF, Boshi's HKEX KRX Semiconductor Index ETF and Value Partners' optical communications active ETF. Before the National Day holiday, ChinaAMC Hong Kong had five ETFs listing on September 28 and 29, and on September 29, two ETFs under Ping An Asset Management (Hong Kong) were set to list. Data shows that 21 ETFs listed on the Hong Kong Stock Exchange this month, half of them in technology and semiconductor themes.

Four ETFs Tracking HKEX Cross-Market Index Series Debut

The Huatai Yingke HKEX Korea Exchange Semiconductor Index ETF, GF HKEX Technology and US Technology 100 Index ETF and Dacheng Galaxy HKEX Bursa Malaysia Large Cap ETF listed on September 28, together with the Boshi HKEX KRX Semiconductor Index ETF listed on September 24, are the first batch of ETFs tracking the HKEX cross-market index series. The Hong Kong Stock Exchange launched the HKEX Bursa Malaysia Large Cap Index, the HKEX Korea Exchange Semiconductor Index and the HKEX Technology and US Technology 100 Index earlier this year, aiming to strengthen Hong Kong's connections with major international markets. The first two are jointly branded indices launched in cooperation with Bursa Malaysia and the Korea Exchange respectively.

Bonnie Chan said: "The three indices we launched bring together investment opportunities across different markets and sectors, meeting investors' growing demand for diversified allocation and consolidating Hong Kong's role as a gateway connecting mainland China with the world." Buyeon Yi, head of the future business division at the Korea Exchange, said: "We are delighted to welcome the listing of ETFs tracking the HKEX Korea Exchange Semiconductor Index. This index is the first jointly branded index launched through cooperation between the Korea Exchange and the Hong Kong Stock Exchange. This demonstrates how the two exchanges can leverage their combined expertise in market operations and index development, promote cross-market cooperation and support investors in regional asset allocation."

"60/40" ETFs See Explosive Growth

With seven "60/40" ETFs listing on the Hong Kong Stock Exchange, as of September 28 the exchange had 27 such ETFs in total. Among them, seven — including the CSOP Hang Seng Hong Kong-US Technology ETF, CSOP FTSE East-West Equity Select ETF, Ping An of China East-West Equity Select ETF and E Fund Global AI ETF — have been included in Stock Connect for mainland investors to trade, covering areas such as US and Korean technology industries, artificial intelligence and high-dividend companies.

The "60/40" structure was born mainly from adjustments by the Shanghai and Shenzhen stock exchanges to the eligibility criteria for Stock Connect ETF inclusion. In July 2024, the requirement for Hong Kong asset weighting in Stock Connect ETFs was lowered from "no less than 90%" to "no less than 60%," with the remaining up to 40% of assets allowed to be invested in overseas listed companies. This helps investors extend their allocation horizons globally while investing in the Hong Kong market, giving rise to the innovative "60/40" ETF category, which quickly became a "dark horse" in southbound ETF Stock Connect.

Hong Kong regulatory figures said the密集 launch of "60/40" ETFs marks an important step for Hong Kong in working with Asian and global exchanges and partners to enrich investment choices and connect Hong Kong with international markets. These indices pool investment opportunities across different markets and sectors, meet investors' growing demand for diversified allocation and consolidate Hong Kong's role as a gateway connecting mainland China with the world.

In fact, "60/40" ETFs have quickly become an important vehicle for the overseas subsidiaries of domestic public fund companies. He Kai, CEO and chief investment officer of GF International, said that with the Hong Kong ETF market currently in a period of historic strategic opportunity, building an ETF business is a core path for the Hong Kong platforms of Chinese fund companies to achieve leapfrog development. In Hong Kong and globally, ETFs are gradually becoming mainstream investment tools. Since ETF Stock Connect launched in 2022, it has become core infrastructure for cross-border allocation, and will significantly enhance the long-term stability and scale of southbound capital, becoming a systemic force reshaping the product logic and investor structure of Hong Kong's ETF market.

In his view, Chinese institutions have the unique endowment of being "linked internally and connected externally," and ETFs are the most direct vehicle for this endowment. Hong Kong's ETF market has seen many successful innovations in recent years, and Chinese fund companies can use these to open new paths and build core competitive advantages.

Industry participants believe that amid investors' growing demand for global asset allocation, "60/40" ETFs, with their unique value of being "rooted in Hong Kong stocks while allocating globally," have opened a new channel for cross-border capital allocation. If conditions such as fund size and index constituent weighting subsequently meet the requirements of the Shanghai and Shenzhen stock exchanges, "60/40" ETFs are expected to be included in southbound ETF Stock Connect. Mainland investors would then be able to allocate global assets through the Stock Connect channel without using QDII quotas or opening overseas accounts, providing more diverse cross-market opportunities while potentially playing an increasingly important role in the two-way opening of the capital market.

Another head of an overseas subsidiary of a domestic asset manager said the company will continue to fully invest in building the ETF ecosystem in the Hong Kong market, using Stock Connect as a link to make comprehensive efforts across broad-based, sector and innovative ETFs, and better provide solutions matching investor needs.

Entry of Insurance Capital and Other "Long Money" Expected to Reshape Hong Kong's ETF Market Ecosystem

Notably, with insurance funds now permitted to invest in Stock Connect ETFs, "60/40" ETFs that do not consume QDII quotas will also become important targets for institutional allocation. CSOP said that in the future, based on understanding the needs of mainland insurance institutions, it will give full play to its research and product capabilities to design allocation-type ETFs that can meet insurers' needs. As competition in the ETF market intensifies, the importance of active research capabilities is becoming more prominent. Research capabilities can help issuers understand industry cycles, corporate earnings quality, valuation structures and market risks, so as to judge whether an ETF truly reflects long-term investment logic rather than merely chasing short-term market hotspots.

"As Stock Connect deepens, the supply of products suitable for long-term capital may continue to expand, strengthening market-making and liquidity support," CSOP said. With policy implementation, institutional research and market infrastructure maturing in tandem, insurance capital's allocation to Hong Kong ETFs will move toward normalization and scale.

Hong Kong's Multi-Asset Ecosystem Flourishes

Bonnie Chan said: "We are pleased that HKEX's index business continues to develop steadily, with more products tracking our indices. By developing our own and jointly branded indices across different asset classes, we are committed to driving product innovation, facilitating capital flows and creating opportunities for issuers, asset managers and investors, supporting the development of Hong Kong's multi-asset ecosystem."

Christina Chen, head of the investment products division at the Hong Kong Securities and Futures Commission, said at the listing ceremony that today's listings confirm the continued vitality and innovative spirit of Hong Kong's ETF market. "We are pleased to see active participation from the industry and remain optimistic about the future development of Hong Kong's ETF ecosystem. We look forward to seeing more innovative ETF products come to market, further enriching investor choices and supporting Hong Kong's development as an international asset and wealth management center," Chen said.