New ETF product offered in RMB investment market

Jane Leung (L), managing director at BlackRock, strikes the gong to open the market of iShares RMB Bond Index ETF at the Stock Exchange of Hong Kong on Tuesday, June 18, 2013. (APD/Intern Yanni Zhang)

iShares RMB Bond Index ETF (Exchange Traded Fund), Asia’s first offshore RMB denominated bond ETF, was listed on the Stock Exchange of Hong Kong on Tuesday.

Managed by the investment institution BlackRock, iShare is a family of exchange-traded funds with over 600 funds globally across equities, fixed income and commodities.

The physical-backed iShares RMB Bond Index ETF is designed to enable investors to easily access the offshore RMB bond market, while offering liquidity, transparency and risk diversification ability.

Apart from a low investment threshold of a board lot of 100 units at an initial issue price of RMB35, the new ETF provides additional accessibility and flexibility as it can be settled in both RMB and the Hong Kong dollar. Investors can gain exposure to 70 issuers across 18 countries and access the performance of 92 bonds in one trade.

“The offshore RMB market grew five times in the last two years and we are happy about the prosperity for RMB bonds in Hong Kong, said Jane Leung, managing director at BlackRock. Currency appreciation and the diversification of holding a basket of RMB bonds were two features that investors were looking for, she added. “The new ETF can bring further diversity to the RMB market in Hong Kong.

The dividend rate for the product is currently 3.5 percent, subject to changes in different bonds in the market.

Leung said that the RMB bond market had increased with continuous strong issuance in 2013 aided by market reforms and regulation relaxation, and RMB bonds yields had been improving as the market matures and were now compelling to investors.

She also expected the global ETF bond market's total value to hit two trillion in the next decade, from 250 billion in 2012.