KraneShares has announced that it now tracks the MSCI China A 50 Connect Index for its China onshore equity UCITS ETF, and that the fund’s name has changed to the KraneShares MSCI China A 50 Connect UCITS ETF (Ticker: KA50).
The new index consists of 50 large-cap Shanghai and Shenzhen listed stocks (A-Shares) available through Stock Connect. On 18 October 2021, the Hong Kong Exchanges and Clearing Ltd (HKEX) launched futures contracts based on the MSCI China A 50 Connect Index. These Futures contracts, designed for offshore investors, represent the first officially recognised risk management tools for Stock Connect-eligible A-shares.
KraneShares writes that the MSCI China A 50 Connect Index offers similar exposure and high correlation to broad China A-share benchmarks.
“However, we believe the new index may offer greater liquidity and investability than those broad indexes because it comprises the most liquid large-cap securities and balanced sector weighting methodology. Additional benefits of the new Index include an expected reduction in tracking error and bid-ask spreads given that market makers can directly hedge exposure with futures,” the firm writes.
“We are proud to have the first UCITS ETF to track the MSCI China A 50 Connect Index. KA50 will focus on the largest most liquid stocks, which receive the majority of foreign interest and inflows,” says Dr Xiaolin Chen, Head of International at KraneShares. “We believe these stocks will continue to be the primary beneficiaries of increased international investment in the years to come.”
“We have a long history of partnering with MSCI as the index provider for our Mainland China equity ETFs. In 2014 we launched the first and largest MSCI-linked China A-Share ETF in the United States ,” says Jonathan Krane, CEO of KraneShares. “We are excited to continue the relationship in our UCITS range with the KraneShares MSCI China A 50 Connect UCITS ETF (Ticker: KA50), which provides industry-leading international access to the China onshore equity market for global investors.”