After China, Korea raised interest rates for the third time this year from 3% to 3.25% to rein in inflation. Slowing U.S. economic recovery and inflationary concerns have kept the Asian markets on back foot during the last week. Japan (Nikkei 225) was the only market which recorded a gain (+0.23%), while Korea (KOSPI2) declined by 3.51%, China (CSI 300) retreated by 0.82%, Hong Kong (HSI) decreased by 2.31%, Singapore (FSSTI) sank by 2.14% and Australia (S&P/ASX 200) slipped by 0.46%.
Last week, one more ETP provider Lion Fund Management Company Ltd entered the Asian ETP market with the launch of a thematic ETF on Shanghai Stock Exchange tracking SSE Emerging Industries Index. Another thematic ETF was launched on Shanghai Stock Exchange by HFT Investment Management Company Ltd tracking SSE Non-Cyclical Industry 100 Index. (See Figure 4 for more details)
Asia-Pacific ETP turnover declined to USD3.8bn (-27.5%) in the last week due to a holiday in the most active markets of the region – Hong Kong, China, Korea and Taiwan. The top position held by Hong Kong (USD959m) was not impacted by the holiday but this time Japan took the second position (USD916m), Korea took third (USD798m) and China was left behind with the fourth position (USD729m). Singapore witnessed a sharp decline of USD297m in the turnover dropping to USD56m in the last week. Week-over-week, Emerging Country ETPs turnover declined to USD1.5bn (-42.4%), while Thematic ETPs climbed to USD204m (+ 96.9%).
Last week again, Asia-Pacific ETP AUM experienced only a slight change contracting by 0.5% over the previous week. ETP AUM stood at USD86.7bn which was USD2.5bn or 3% above the last year’s closing. This year-to-date change has been mostly supported by inflows due to new products and, apparently, higher ETF adoption rates by investors in the region, as the markets remain deep into the negative sector which would suggest these inflows are not related to a market trend as we have seen in other regions such as in the US.
