Enhanced Investment Products Limited’s (EIP) exchange traded funds (ETF) business XIE Shares has launched its first leveraged product, the XIE Shares Chimerica FTSE N Share Daily (2X) Leveraged Product, on the Hong Kong Stock Exchange (HKEx).
The 2X Chimerica will be the first leveraged product in Hong Kong to provide leveraged exposure to US listed Chinese ADRs.
The 2X Chimerica will provide investors a cost effective way to capitalise on the performance of some of China’s fastest-growing companies— blue chip new economy stocks listed in America, such as Alibaba, Baidu, New Oriental Education Group, JD.com, NetEase, Vipshop, Ctrip and others.
The launch of the 2X Chimerica is a response to the 2016 approval of leveraged and inverse products in Hong Kong. The 2X Chimerica follows the FTSE N Share 2x Daily Leveraged Index, which provides leveraged exposure to the stocks inside the Chimerica (3161.HK) ETF. Since its inception on 22 April 2015, the Chimerica ETF has outperformed China related indices in Hong Kong by 34 per cent and has become one of Hong Kong’s most popular traded ETFs. Stocks inside the Chimerica ETF are not represented in benchmarks such as A50, CSI 300, HSI, or HSCEI.
The 2X Chimerica comprises of the largest Chinese internet related and technology stocks listed in America on the NYSE or NASDAQ exchanges.
Tobias Bland, CEO of EIP, says: “We are excited to provide investors in Asia with a product that allows them to benefit from cost effective leverage in some of China’s most popular market segments, internet and technology. The 21 constituents that comprise this product are securities that investors know well since they are concentrated in the growing internet and technology industries, including names such as Alibaba, Baidu, New Oriental Education Group, JD.com, NetEase, Vipshop, Ctrip and others.”
Jonathan Slone, CLSA’s CEO, says: “We are excited to see EIP launching this 2X Chimerica on the back of the successful launch of its Chimerica ETF in 2015. Given CLSA’s deep industry knowledge on the China Internet and Technology sectors, we believe investors will look to increase exposure towards one of China’s fastest-growing market segments.”
Sudir Raju, managing director ETF relationships, Asia, FTSE Russell, says: “FTSE Russell is seeing strong growth from ETF issuers in the Asia region who value our approach to index construction which emphasises rules-based construction, transparent methodologies and strong independent governance. We have a proven track record in creating China benchmarks that allow ETF issuers to offer new investment opportunities to their clients, and we are delighted that XIE Shares has decided to licence the FTSE N Share 2x Daily Leveraged Index for its new product, the first to be tracking this index.”
The 2X Chimerica is the fourth product to launch following CLSA’s investment into EIP’s XIE Shares ETF business in September 2014.
In April 2015, XIE Shares FTSE Chimerica ETF (3161.HK) launched as the first pure-play ETF to access Chinese New Economy stocks listed in America.
In November 2015, XIE Shares CLSA GARY ETF (3102.HK) launched to provide investors with access to Asian companies with competitive yield, growth, and debt profiles.
In November 2016, XIE Shares FTSE Gold Miners ETF (3116.HK) launched, which enables retail and institutional investors to capitalise on gold price fluctuations through the ownership of gold mining stocks.