Across The Border | More Hong Kong exchange traded funds seen delisting next year as product lines overhauled

Hong Kong will see more exchange traded funds (ETFs) delisted next year as fund managers continue to overhaul their product lines amid slow asset growth and low turnover.

“I believe there will be more delistings in Hong Kong,” Eva Chan, a partner at law firm Simmons & Simmons, which has advised on over two thirds of the ETFs in the city, told the Post.

She said delisting was a healthy trend for the ETF market as fund managers can reallocate the resources to more profitable products or launch new ETFs that cater to investor interests.

Delistings may be seen among overlapping ETFs due to fierce competition and sluggish growth of assets under management (AUM), Chan said.

So far this year, fund managers have announced plans to delist 26 ETFs from the Hong Kong market that currently has 182 tradable ETFs, according to a Post review of filings with the Hong Kong Exchanges and Clearing.

Jackie Choy, Morningstar’s director of ETF research for Asia, said such a number of delistings has not been seen in at least three years.
The most common reason for delisting was a low level of AUM, making it expensive to keep the ETF going, Choy said, adding that most of the 26 delisted ETFs accumulated only HK$10 million to HK$70 million in AUM.