HK’s CSOP Asset Management to list South-east Asia tech ETF in Singapore

SINGAPORE – A Hong Kong financial firm will list a tech-focused exchange-traded fund (ETF) here later in June in what is expected to herald similar products coming to the local market.

ETF issuer CSOP Asset Management kicked off the initial offering period for its CSOP iEdge Southeast Asia+ Tech Index ETF on Tuesday, with its market debut slated for June 20.

It will not be the only one in 2023, with the Singapore Exchange (SGX) anticipating other such funds from the region to seek a listing here.

An SGX spokesman told The Straits Times on Wednesday: “We are expecting more regional equities ETF launches in coming months. These include the China-focused A-Shares ETF listings under the Singapore-China ETF Product link.”

The CSOP ETF will join 38 others already being traded in Singapore but will be only the second ETF to focus solely on the tech sector, joining the Lion-OCBC Securities Hang Seng Tech ETF which debuted in December 2020.

CSOP’s fund aims to tap the rapid growth of the tech industry across South-east Asia and India through its exposure to 30 companies, including Singapore-based online consumer firm Sea, Thai component maker Delta Electronics, Indonesian conglomerate Astra International and Indian software and consultancy firms Infosys and Wipro.

This ETF will be CSOP Asset Management’s fifth fund to be listed in Singapore, following its initial foray in 2019. The four earlier funds had around US$1.17 billion (S$1.58 billion) in assets under management, or 11 per cent of the Singapore ETF market as at March 31.

CSOP Asset Management said the notion of a listing here has been on the cards for several years, with the decision now being prompted by several key factors, including rising investor interest and the structural shift in manufacturing supply chains towards South-east Asia.

Providend Wealth Advisory research analyst Lim Choon Siong said the tech sector has been doing quite well because of optimism about artificial intelligence, while recent strong earnings showed that these companies are resilient in spite of high inflation and rising interest rates.

But he added that tech stocks tend to have higher volatility as their expected earnings are further out in the future than their non-tech peers, so changes to these expectations have a larger impact on their share price.

Mr Lim said investing in the tech sector exposes investors to idiosyncratic risks. In comparison, a well-diversified portfolio would mean lower volatility, which would lessen the erosion of the principal when markets fall, and so improve returns.

On the flip side, CSOP’s ETF was benchmarked against an index that has greater diversity across sectors, whereas other tech indices focused on the tech sector solely, Phillip Securities ETF specialist Marcus Teo said.

He added that the ETF would enable investors to take advantage of the fast-growing digital sector, especially in a region like South-east Asia, where Internet penetration is still fairly low relative to other parts of the world.

The volume of ETFs traded on SGX reached around 148 million units in April – down 20 from a year earlier – while the turnover of $248 million was 45 per cent lower.

The Lion-OCBC Securities Hang Seng Tech ETF was the most actively traded by volume and the second most active by turnover.

Assets under management of all the ETFs listed on SGX amounted to $11 billion as at the end of May.