SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Ind & Comm Bk Of China (A) / Equity Bottom-Up

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<ul>
<li>
Big moves across asset markets, at times fast-paced, set a stage for increased ETF trading and investing in 2020. The combined AUM of all ETFs listed in Singapore has grown 57% from S$5.49 billion in 2019 to S$8.60 billion in 2020. Combined turnover of these ETFs also increased 156% from 2019 levels, to S$5.41 billion in 2020. 
	 </li>
	<li>
In Singapore, the SPDR® Gold Shares ETF made up 18% of the combined AUM of all the ETFs listed for trading as of the end of 2020. This was down from 27% in 2019, indicating Singapore ETF investors embraced volatility and increased appetites for market risk throughout the year. 
	 </li>
	<li>The combined AUM of the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF ended 2020 at S$2.07 billion. Investors also continued to seek for yield with four out of the top five dividend paying ETFs falling under the top 10 most traded ETFs in 2020.</li>
</ul>
 

In 2020, Exchange Traded Funds (“ETFs”) served as an effective means for portfolio managers seeking quick and cost-effective broad index exposures. There were more than a handful of sessions which saw capital markets move veraciously, which placed increased the emphasis of transaction time%liness. The efficiency at whicsorryh investors can gain broad market exposure in one-click is one of the key beneficial traits of ETFs. The moves in 2020 coincided with the combined Assets under Management (“AUM”) of all ETFs listed in Singapore growing 57% from S$5.49 billion in 2019 to S$8.60 billion in 2020. At the same time combined trading turnover of these ETFs increased 156% from 2019 levels, to S$5.41 billion. There were 31 ETFs listed in Singapore as of the end of 2020. While the SPDR® Gold Shares was again the most traded of the Singapore-listed ETFs in 2020, it was also the third best performing of the gorup with a 23.6% return in SGD terms. This brought the five year annualised return of the recognised safe-haven ETF market to 11.8%. In 2020, the five SPDR® Gold Shares ETFs traded globally attracted net inflows of US$16 billion, ending the year with global AUM of US$71 billion. 
The performance of the Straits Times Index (“STI”), like most global benchmarks, maintains a historical statistically insignificant 5% correlation to the price of Gold. The World Gold Council suggests that when investors add risky assets to their portfolio, Gold should make up 2% to 10% of the portfolio. Including assets with a low correlation to each other helps reduce overall portfolio risk. In Singapore, the SPDR® Gold Shares made up 18% of the combined AUM of all the ETFs listed for trading as of the end of 2020. This was down significantly from 27% at the end of 2019, indicating that Singapore ETF investors embraced the risk presented to investors throughout the year. Trading activity indicates that the increase in risk was taken through ETFs tracking local equities. The remaining top five traded ETFs for 2020 comprised of the two STI ETFs – the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF, and two of the three REIT-focused ETFs: the Nikko AM – Straits Trading Asia ex Japan REIT ETF and the Lion-Phillip S-REIT ETF.

<table class="table table-striped"><tbody>
<tr>
<td>
			10 Most traded Singapore-listed ETFs in 2020
			</td>
			<td>
			Code
			</td>
			<td>
			2020 Total Turnover S$M
			</td>
			<td>
			2020 Net Inflows S$M
			</td>
			<td>
			AUM S$M
			</td>
			<td>
			Total Expense Ratio
			</td>
			<td>
			2020 Return
			</td>
		</tr>
<tr>
<td>
			SPDR®  GOLD SHARES
			</td>
			<td>
			O87
			</td>
			<td>
			        1,634
			</td>
			<td>
			  21,950
			</td>
			<td>
			  94,021
			</td>
			<td>
			0.40%
			</td>
			<td>
			23.6%
			</td>
		</tr>
<tr>
<td>
			SPDR® Straits Times Index ETF
			</td>
			<td>
			ES3
			</td>
			<td>
			        1,583
			</td>
			<td>
			       780
			</td>
			<td>
			    1,601
			</td>
			<td>
			0.30%
			</td>
			<td>
			-8.1%
			</td>
		</tr>
<tr>
<td>
			Nikko AM - Straits Trading Asia ex Japan REIT ETF
			</td>
			<td>
			CFA / COI
			</td>
			<td>
			           230
			</td>
			<td>
			         67
			</td>
			<td>
			       251
			</td>
			<td>
			0.60%
			</td>
			<td>
			-5.1%
			</td>
		</tr>
<tr>
<td>
			Nikko AM Singapore STI ETF
			</td>
			<td>
			G3B
			</td>
			<td>
			           222
			</td>
			<td>
			       172
			</td>
			<td>
			       470
			</td>
			<td>
			0.30%
			</td>
			<td>
			-8.4%
			</td>
		</tr>
<tr>
<td>
			Lion-Phillip S-REIT ETF
			</td>
			<td>
			CLR
			</td>
			<td>
			           192
			</td>
			<td>
			         56
			</td>
			<td>
			       210
			</td>
			<td>
			0.60%
			</td>
			<td>
			-1.7%
			</td>
		</tr>
<tr>
<td>
			ICBC CSOP FTSE Chinese Government Bond ETF
			</td>
			<td>
			CYC / CYB
			</td>
			<td>
			           176
			</td>
			<td>
			       590
			</td>
			<td>
			    1,521
			</td>
			<td>
			0.25%
			</td>
			<td>
			2.5%*
			</td>
		</tr>
<tr>
<td>
			iShares Barclays USD Asia High Yield Bond Index ETF
			</td>
			<td>
			O9P/ QL3
			</td>
			<td>
			           151
			</td>
			<td>
			         41
			</td>
			<td>
			       213
			</td>
			<td>
			0.44%
			</td>
			<td>
			3.2%
			</td>
		</tr>
<tr>
<td>
			iShares MSCI India Index ETF
			</td>
			<td>
			I98/ QK9
			</td>
			<td>
			           138
			</td>
			<td>
			-        28
			</td>
			<td>
			       113
			</td>
			<td>
			1.03%
			</td>
			<td>
			9.9%
			</td>
		</tr>
<tr>
<td>
			ABF Singapore Bond Index Fund
			</td>
			<td>
			A35
			</td>
			<td>
			           120
			</td>
			<td>
			         62
			</td>
			<td>
			    1,008
			</td>
			<td>
			0.25%
			</td>
			<td>
			8.0%
			</td>
		</tr>
<tr>
<td>
			Lyxor China Enterprise (HSCEI) UCITS ETF - USD
			</td>
			<td>
			P58
			</td>
			<td>
			           117
			</td>
			<td>
			       348
			</td>
			<td>
			    1,937
			</td>
			<td>
			0.65%
			</td>
			<td>
			-0.6%
			</td>
		</tr>
</tbody></table>
 *Note returns from listing date. Returns are in SGD for dual currency counters.

 

The combined AUM of the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF ended 2020 at S$2.07 billion. As noted in previous Market Updates, it took 17 years for the AUM of STI ETFs to reach S$1.00 billion, and 17 months to reach S$2.00 billion. Likewise the current 30 STI constituents were recipient to S$7.5 billion of net retail inflows for the year, after these same 30 stocks saw net retail outflows of S$1.2 billion in 2019. As discusssed <a href="https://www.sgx.com/research-education/market-updates/20210104-12-stocks-attracted-significant-trading-activity-2020">here</a>, the STI generated an 8.1% decline in 2020, after generating a 9.4% total return in 2019. The top five ETFs held by Supplement Retirement Scheme (SRS) investors include the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF, in addition to the SPDR® Gold Shares and the Lion-Phillip S-REIT ETF and the ABF Singapore Bond Index Fund ETF. Another key theme observed through ETF activity was that Investors continued to seek for yield with four out of the top five dividend paying ETFs falling under the top 10 most traded ETFs in 2020. These included the aforementioned two REIT ETFs and the Nikko AM Singapore STI ETF. The iShares Barclays USD Asia High Yield Bond Index ETF was the top yielding ETF in 2020 in addition to being the seventh most traded ETF for the year.

<table class="table table-striped"><tbody>
<tr>
<td>
			Top 5 Dividend Yielding ETFs
			</td>
			<td>
			Code
			</td>
			<td>
			Gross 12 Month Dividend
			</td>
		</tr>
<tr>
<td>
			iShares Barclays USD Asia High Yield Bond Index ETF
			</td>
			<td>
			O9P/ QL3
			</td>
			<td>
			6.1%
			</td>
		</tr>
<tr>
<td>
			Nikko AM - Straits Trading Asia ex Japan REIT ETF
			</td>
			<td>
			CFA / COI
			</td>
			<td>
			5.1%
			</td>
		</tr>
<tr>
<td>
			Lion-Phillip S-REIT ETF
			</td>
			<td>
			CLR
			</td>
			<td>
			4.6%
			</td>
		</tr>
<tr>
<td>
			Phillip SING Income ETF
			</td>
			<td>
			OVQ
			</td>
			<td>
			4.5%
			</td>
		</tr>
<tr>
<td>
			Nikko AM Singapore STI ETF
			</td>
			<td>
			G3B
			</td>
			<td>
			4.3%
			</td>
		</tr>
</tbody></table>
 Returns are in SGD for dual currency counters

 

<table class="table table-striped"><tbody>
<tr>
<td>
			Top Five Performing Singapore-listed ETFs in 2020
			</td>
			<td>
			Code
			</td>
			<td>
			2020 Return
			</td>
		</tr>
<tr>
<td>
			Xtrackers MSCI China UCITS ETF
			</td>
			<td>
			LG9/ TID
			</td>
			<td>
			31.6%
			</td>
		</tr>
<tr>
<td>
			UNITED SSE 50 CHINA ETF
			</td>
			<td>
			JK8
			</td>
			<td>
			26.9%
			</td>
		</tr>
<tr>
<td>
			SPDR®  GOLD SHARES
			</td>
			<td>
			O87
			</td>
			<td>
			23.6%
			</td>
		</tr>
<tr>
<td>
			Lyxor MSCI AC Asia Pacific Ex Japan UCITS ETF - USD
			</td>
			<td>
			AEJ
			</td>
			<td>
			20.3%
			</td>
		</tr>
<tr>
<td>
			Lyxor MSCI Emerging Markets UCITS ETF - Acc USD
			</td>
			<td>
			LEM
			</td>
			<td>
			18.2%
			</td>
		</tr>
</tbody></table>
 Returns are in SGD for dual currency counters

 

The three top performing Singapore-listed ETFs in 2020 included the Xtrackers MSCI China UCITS ETF, the United SSE 50 China ETF and the SPDR® Gold Shares with the trio averaging 27.4% returns for the year. The China economic recovery in 2H20 and its subsequent growth outlook for 2021 was been a key driver for China’s equity, currency, relevant commodity and fixed income markets in 2020. This week, the World Bank estimated China’s economy will grow by 7.9% in 2021, almost double the expected global growth rate for the year ahead. Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. 
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors. 
To find out more about ETFs, click <a href="https://www.sgxacademy.com/home/infographics/what-you-need-to-know-about-investing-in-etfs/?utm_source=Research&amp;utm_medium=MU&amp;utm_campaign=ETFs&amp;utm_term=%2708062020&amp;utm_content=Market%20Update">here</a>. 
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Big moves across asset markets, at times fast-paced, set a stage for increased ETF trading and investing in 2020. The combined AUM of all ETFs listed in Singapore has grown 57% from S$5.49 billion in 2019 to S$8.60 billion in 2020. Combined turnover of these ETFs also increased 156% from 2019 levels, to S$5.41 billion in 2020.  
	 
	
In Singapore, the SPDR® Gold Shares ETF made up 18% of the combined AUM of all the ETFs listed for trading as of the end of 2020. This was down from 27% in 2019, indicating Singapore ETF investors embraced volatility and increased appetites for market risk throughout the year.  
	 
	The combined AUM of the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF ended 2020 at S$2.07 billion. Investors also continued to seek for yield with four out of the top five dividend paying ETFs falling under the top 10 most traded ETFs in 2020.

 

In 2020, Exchange Traded Funds (“ETFs”) served as an effective means for portfolio managers seeking quick and cost-effective broad index exposures. There were more than a handful of sessions which saw capital markets move veraciously, which placed increased the emphasis of transaction time%liness. The efficiency at whicsorryh investors can gain broad market exposure in one-click is one of the key beneficial traits of ETFs. The moves in 2020 coincided with the combined Assets under Management (“AUM”) of all ETFs listed in Singapore growing 57% from S$5.49 billion in 2019 to S$8.60 billion in 2020. At the same time combined trading turnover of these ETFs increased 156% from 2019 levels, to S$5.41 billion. There were 31 ETFs listed in Singapore as of the end of 2020.  While the SPDR® Gold Shares was again the most traded of the Singapore-listed ETFs in 2020, it was also the third best performing of the gorup with a 23.6% return in SGD terms. This brought the five year annualised return of the recognised safe-haven ETF market to 11.8%. In 2020, the five SPDR® Gold Shares ETFs traded globally attracted net inflows of US$16 billion, ending the year with global AUM of US$71 billion.  
The performance of the Straits Times Index (“STI”), like most global benchmarks, maintains a historical statistically insignificant 5% correlation to the price of Gold. The World Gold Council suggests that when investors add risky assets to their portfolio, Gold should make up 2% to 10% of the portfolio. Including assets with a low correlation to each other helps reduce overall portfolio risk.  In Singapore, the SPDR® Gold Shares made up 18% of the combined AUM of all the ETFs listed for trading as of the end of 2020. This was down significantly from 27% at the end of 2019, indicating that Singapore ETF investors embraced the risk presented to investors throughout the year.  Trading activity indicates that the increase in risk was taken through ETFs tracking local equities. The remaining top five traded ETFs for 2020 comprised of the two STI ETFs – the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF, and two of the three REIT-focused ETFs: the Nikko AM – Straits Trading Asia ex Japan REIT ETF and the Lion-Phillip S-REIT ETF.




			10 Most traded Singapore-listed ETFs in 2020
			
			
			Code
			
			
			2020 Total Turnover S$M
			
			
			2020 Net Inflows S$M
			
			
			AUM S$M
			
			
			Total Expense Ratio
			
			
			2020 Return
			
		


			SPDR®  GOLD SHARES
			
			
			O87
			
			
			        1,634
			
			
			  21,950
			
			
			  94,021
			
			
			0.40%
			
			
			23.6%
			
		


			SPDR® Straits Times Index ETF
			
			
			ES3
			
			
			        1,583
			
			
			       780
			
			
			    1,601
			
			
			0.30%
			
			
			-8.1%
			
		


			Nikko AM - Straits Trading Asia ex Japan REIT ETF
			
			
			CFA / COI
			
			
			           230
			
			
			         67
			
			
			       251
			
			
			0.60%
			
			
			-5.1%
			
		


			Nikko AM Singapore STI ETF
			
			
			G3B
			
			
			           222
			
			
			       172
			
			
			       470
			
			
			0.30%
			
			
			-8.4%
			
		


			Lion-Phillip S-REIT ETF
			
			
			CLR
			
			
			           192
			
			
			         56
			
			
			       210
			
			
			0.60%
			
			
			-1.7%
			
		


			ICBC CSOP FTSE Chinese Government Bond ETF
			
			
			CYC / CYB
			
			
			           176
			
			
			       590
			
			
			    1,521
			
			
			0.25%
			
			
			2.5%*
			
		


			iShares Barclays USD Asia High Yield Bond Index ETF
			
			
			O9P/ QL3
			
			
			           151
			
			
			         41
			
			
			       213
			
			
			0.44%
			
			
			3.2%
			
		


			iShares MSCI India Index ETF
			
			
			I98/ QK9
			
			
			           138
			
			
			-        28
			
			
			       113
			
			
			1.03%
			
			
			9.9%
			
		


			ABF Singapore Bond Index Fund
			
			
			A35
			
			
			           120
			
			
			         62
			
			
			    1,008
			
			
			0.25%
			
			
			8.0%
			
		


			Lyxor China Enterprise (HSCEI) UCITS ETF - USD
			
			
			P58
			
			
			           117
			
			
			       348
			
			
			    1,937
			
			
			0.65%
			
			
			-0.6%
			
		

 *Note returns from listing date. Returns are in SGD for dual currency counters.

 

The combined AUM of the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF ended 2020 at S$2.07 billion. As noted in previous Market Updates, it took 17 years for the AUM of STI ETFs to reach S$1.00 billion, and 17 months to reach S$2.00 billion. Likewise the current 30 STI constituents were recipient to S$7.5 billion of net retail inflows for the year, after these same 30 stocks saw net retail outflows of S$1.2 billion in 2019. As discusssed here, the STI generated an 8.1% decline in 2020, after generating a 9.4% total return in 2019. The top five ETFs held by Supplement Retirement Scheme (SRS) investors include the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF, in addition to the SPDR® Gold Shares and the Lion-Phillip S-REIT ETF and the ABF Singapore Bond Index Fund ETF.  Another key theme observed through ETF activity was that Investors continued to seek for yield with four out of the top five dividend paying ETFs falling under the top 10 most traded ETFs in 2020. These included the aforementioned two REIT ETFs and the Nikko AM Singapore STI ETF. The iShares Barclays USD Asia High Yield Bond Index ETF was the top yielding ETF in 2020 in addition to being the seventh most traded ETF for the year.




			Top 5 Dividend Yielding ETFs
			
			
			Code
			
			
			Gross 12 Month Dividend
			
		


			iShares Barclays USD Asia High Yield Bond Index ETF
			
			
			O9P/ QL3
			
			
			6.1%
			
		


			Nikko AM - Straits Trading Asia ex Japan REIT ETF
			
			
			CFA / COI
			
			
			5.1%
			
		


			Lion-Phillip S-REIT ETF
			
			
			CLR
			
			
			4.6%
			
		


			Phillip SING Income ETF
			
			
			OVQ
			
			
			4.5%
			
		


			Nikko AM Singapore STI ETF
			
			
			G3B
			
			
			4.3%
			
		

 Returns are in SGD for dual currency counters

 




			Top Five Performing Singapore-listed ETFs in 2020
			
			
			Code
			
			
			2020 Return
			
		


			Xtrackers MSCI China UCITS ETF
			
			
			LG9/ TID
			
			
			31.6%
			
		


			UNITED SSE 50 CHINA ETF
			
			
			JK8
			
			
			26.9%
			
		


			SPDR®  GOLD SHARES
			
			
			O87
			
			
			23.6%
			
		


			Lyxor MSCI AC Asia Pacific Ex Japan UCITS ETF - USD
			
			
			AEJ
			
			
			20.3%
			
		


			Lyxor MSCI Emerging Markets UCITS ETF - Acc USD
			
			
			LEM
			
			
			18.2%
			
		

 Returns are in SGD for dual currency counters

 

The three top performing Singapore-listed ETFs in 2020 included the Xtrackers MSCI China UCITS ETF, the United SSE 50 China ETF and the SPDR® Gold Shares with the trio averaging 27.4% returns for the year. The China economic recovery in 2H20 and its subsequent growth outlook for 2021 was been a key driver for China’s equity, currency, relevant commodity and fixed income markets in 2020. This week, the World Bank estimated China’s economy will grow by 7.9% in 2021, almost double the expected global growth rate for the year ahead.  Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.  
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.  
To find out more about ETFs, click here. 



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<ul>
<li>
The NikkoAM-ICBCSG China Bond ETF will be listed on the Singapore Exchange on 24 November 2020, offering investors low cost and direct access to the world’s second-largest bond market. The ETF tracks the ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index, which offers an indicative index yield of 3.36%.  
	 </li>
	<li>
The ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index invests in CNY-denominated bonds issued by the Chinese treasury and policy banks with credit quality of A1 or A+ as rated by Moody’s, S&amp;P and Fitch. As Chinese policy bank bonds yield 0.30-0.50% higher than Chinese government bonds, the fund is expected to offer a highly competitive yield.  
	 </li>
	<li>With gradual inclusion of Chinese government bonds and policy bank bonds by major index providers, demand for China bonds is expected to increase. In the YTD, foreign institutional holdings of onshore China bonds have crossed US$400 billion.</li>
</ul>
The <a href="https://www.nikkoam.com.sg/etf/china-bond-etf?gclid=EAIaIQobChMIx9adusaS7QIVTA4rCh2fYAV5EAAYASAAEgK1cfD_BwE">NikkoAM-ICBCSG China Bond ETF</a>, managed by Nikko Asset Management, will be listed on the Singapore Exchange on 24 November 2020, kicking off with US$192 million in assets under management. The ETF is developed through a partnership between Nikko Asset Management Asia and Industrial and Commercial Bank of China, Singapore Branch as its investment advisors.

The ETF seeks to replicate the performance of the ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index, which offers an indicative index yield of 3.36%. Investors have the opportunity to invest in an asset class with competitive yield and to diversify their existing investment portfolios.

Key Drivers of China Bonds 

<ul>
<li>Index Inclusion of China Bonds</li>
</ul>
The Chinese government bond market currently has foreign participation rate of 8.5%, which is one of the lowest among Asian emerging markets. With gradual inclusion of Chinese government bonds and policy bank bonds by major index providers, demand for China bonds is expected to increase. In the year to date, foreign institutional holdings of onshore China bonds have crossed US$400 billion.

<ul>
<li>Internationalisation of the RMB</li>
</ul>
The RMB represents approximately 11% of the International Monetary Fund’s (IMF) Special Drawing Rights (SDR), but only approximately 2% of current world reserves are held in RMB. As global central banks increase their allocation of reserves in RMB, demand for RMB assets is expected to rise significantly.
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Chinese Policy Bank Bonds Offer Additional Yield 

The NikkoAM-ICBCSG China Bond ETF has an allocation of close to 60% into Chinese policy bank bonds. Chinese policy bank bonds are bonds issued by the China Development Bank, the Agricultural Development Bank of China and the Export-Import Bank of China. These policy banks are state-owned and their objectives include stimulating the economy and supporting growing local industries. Similar to Chinese government bonds, Chinese policy bank bonds are rated A1/A+ by Moody’s, S&amp;P and Fitch.

Comparing the most liquid portions of the yield curve (i.e. the 5-year and 10-year space) the China policy bank bonds offer 0.30% to 0.50% in yield pick-up. This is on top of the yield premium that Chinese government bonds presents over US Treasuries as a result of aggressive bond-buying programs launched by the US Federal Reserve.
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Shorter Bond Duration Offers Lower Price Volatility

The NikkoAM-ICBCSG China Bond ETF consists of bonds with maturity of less than 10 years. With the lower duration, short-term bonds are generally less sensitive to interest-rate changes.
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Fund Details

<table class="table table-striped"><tbody>
<tr>
<td>
			Fund Manager
			</td>
			<td>
			Nikko Asset Management Asia Limited
			</td>
		</tr>
<tr>
<td>
			Index
			</td>
			<td>
			<a href="http://yield.chinabond.com.cn/cbweb-mn/indices/single_index_query?locale=en_US">ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index</a>

			Index RIC: .CDCGH1-10TPBI

			Bloomberg code: CDCP13TR
			</td>
		</tr>
<tr>
<td>
			Base Currency
			</td>
			<td>
			Dual Fund Classes

			<ul>
<li>RMB Class (ISIN: SGXC29409643)</li>
				<li>SGD Class (ISIN: SGXC30096447)</li>
			</ul>
</td>
		</tr>
<tr>
<td>
			Indicative Yield*
			</td>
			<td>
			3.23%
			</td>
		</tr>
<tr>
<td>
			Indicative Duration*
			</td>
			<td>
			4.1 years
			</td>
		</tr>
<tr>
<td>
			Credit Quality
			</td>
			<td>
			A1/A+  by Moody’s/ S&amp;P and Fitch
			</td>
		</tr>
<tr>
<td>
			Total Expense ratio (TER)
			</td>
			<td>
			30 bps
			</td>
		</tr>
<tr>
<td>
			Replication
			</td>
			<td>
			Representative Sampling Strategy
			</td>
		</tr>
</tbody></table>
*as represented by index data 

<h4>Key Trading Specifications</h4>

<table class="table table-striped"><tbody>
<tr>
<td>
			Fund Class
			</td>
			<td>
			SGD Class (Distribution)
			</td>
			<td colspan="3">
			RMB Class (Accumulation)
			</td>
		</tr>
<tr>
<td>
			Base Currency
			</td>
			<td>
			SGD
			</td>
			<td colspan="3">
			RMB
			</td>
		</tr>
<tr>
<td>
			SGX Trading Name
			</td>
			<td>
			NIKKOAM-ICBCSG CNB S$
			</td>
			<td colspan="2">
			NIKKOAM-ICBCSG CNB US$
			</td>
			<td>
			NIKKOAM-ICBCSG CNB CNY
			</td>
		</tr>
<tr>
<td>
			SGX Stock Code
			</td>
			<td>
			ZHS
			</td>
			<td colspan="2">
			ZHD
			</td>
			<td>
			ZHY
			</td>
		</tr>
<tr>
<td>
			Trading Currency
			</td>
			<td>
			SGD counter
			</td>
			<td colspan="2">
			USD counter
			</td>
			<td>
			CNY counter
			</td>
		</tr>
<tr>
<td>
			RIC and BBG Ticker
			</td>
			<td>
			NIIC.SI

			ZHS SP Equity
			</td>
			<td colspan="2">
			NIIC-D.SI

			ZHD SP Equity
			</td>
			<td>
			NIIC-D1.SI

			ZHY SP Equity
			</td>
		</tr>
<tr>
<td>
			Trading Lot Size
			</td>
			<td colspan="2">
			10 shares (~S$1/share)
			</td>
			<td>
			10 shares (~US$0.7/share)
			</td>
			<td>
			10 shares

			(~CNY5/share)
			</td>
		</tr>
<tr>
<td>
			Tick Size
			</td>
			<td colspan="2">
			S$0.001
			</td>
			<td>
			US$0.001
			</td>
			<td>
			CNY 0.01
			</td>
		</tr>
<tr>
<td> </td>
			<td> </td>
			<td> </td>
			<td> </td>
			<td> </td>
		</tr>
</tbody></table>
 

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. 
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors. 
To find out more about Fixed Income ETFs, click <a href="https://www.sgxacademy.com/home/infographics/what-you-need-to-know-about-fixed-income-exchange-traded-funds-etfs/">here</a>.
</body></html>





The NikkoAM-ICBCSG China Bond ETF will be listed on the Singapore Exchange on 24 November 2020, offering investors low cost and direct access to the world’s second-largest bond market. The ETF tracks the ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index, which offers an indicative index yield of 3.36%.  
	 
	
The ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index invests in CNY-denominated bonds issued by the Chinese treasury and policy banks with credit quality of A1 or A+ as rated by Moody’s, S&amp;P and Fitch. As Chinese policy bank bonds yield 0.30-0.50% higher than Chinese government bonds, the fund is expected to offer a highly competitive yield.  
	 
	With gradual inclusion of Chinese government bonds and policy bank bonds by major index providers, demand for China bonds is expected to increase. In the YTD, foreign institutional holdings of onshore China bonds have crossed US$400 billion.

The NikkoAM-ICBCSG China Bond ETF, managed by Nikko Asset Management, will be listed on the Singapore Exchange on 24 November 2020, kicking off with US$192 million in assets under management. The ETF is developed through a partnership between Nikko Asset Management Asia and Industrial and Commercial Bank of China, Singapore Branch as its investment advisors.

The ETF seeks to replicate the performance of the ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index, which offers an indicative index yield of 3.36%. Investors have the opportunity to invest in an asset class with competitive yield and to diversify their existing investment portfolios.

Key Drivers of China Bonds 


Index Inclusion of China Bonds

The Chinese government bond market currently has foreign participation rate of 8.5%, which is one of the lowest among Asian emerging markets. With gradual inclusion of Chinese government bonds and policy bank bonds by major index providers, demand for China bonds is expected to increase. In the year to date, foreign institutional holdings of onshore China bonds have crossed US$400 billion.


Internationalisation of the RMB

The RMB represents approximately 11% of the International Monetary Fund’s (IMF) Special Drawing Rights (SDR), but only approximately 2% of current world reserves are held in RMB. As global central banks increase their allocation of reserves in RMB, demand for RMB assets is expected to rise significantly.



      
    
    cms1


Chinese Policy Bank Bonds Offer Additional Yield 

The NikkoAM-ICBCSG China Bond ETF has an allocation of close to 60% into Chinese policy bank bonds. Chinese policy bank bonds are bonds issued by the China Development Bank, the Agricultural Development Bank of China and the Export-Import Bank of China. These policy banks are state-owned and their objectives include stimulating the economy and supporting growing local industries. Similar to Chinese government bonds, Chinese policy bank bonds are rated A1/A+ by Moody’s, S&amp;P and Fitch.

Comparing the most liquid portions of the yield curve (i.e. the 5-year and 10-year space) the China policy bank bonds offer 0.30% to 0.50% in yield pick-up. This is on top of the yield premium that Chinese government bonds presents over US Treasuries as a result of aggressive bond-buying programs launched by the US Federal Reserve.



      
    
    cms2


Shorter Bond Duration Offers Lower Price Volatility

The NikkoAM-ICBCSG China Bond ETF consists of bonds with maturity of less than 10 years. With the lower duration, short-term bonds are generally less sensitive to interest-rate changes.



      
    
    cms3


Fund Details




			Fund Manager
			
			
			Nikko Asset Management Asia Limited
			
		


			Index
			
			
			ChinaBond ICBC 1-10 Year Treasury and Policy Bank Bond Index

			Index RIC: .CDCGH1-10TPBI

			Bloomberg code: CDCP13TR
			
		


			Base Currency
			
			
			Dual Fund Classes

			
RMB Class (ISIN: SGXC29409643)
				SGD Class (ISIN: SGXC30096447)
			

		


			Indicative Yield*
			
			
			3.23%
			
		


			Indicative Duration*
			
			
			4.1 years
			
		


			Credit Quality
			
			
			A1/A+  by Moody’s/ S&amp;P and Fitch
			
		


			Total Expense ratio (TER)
			
			
			30 bps
			
		


			Replication
			
			
			Representative Sampling Strategy
			
		

*as represented by index data 

Key Trading Specifications




			Fund Class
			
			
			SGD Class (Distribution)
			
			
			RMB Class (Accumulation)
			
		


			Base Currency
			
			
			SGD
			
			
			RMB
			
		


			SGX Trading Name
			
			
			NIKKOAM-ICBCSG CNB S$
			
			
			NIKKOAM-ICBCSG CNB US$
			
			
			NIKKOAM-ICBCSG CNB CNY
			
		


			SGX Stock Code
			
			
			ZHS
			
			
			ZHD
			
			
			ZHY
			
		


			Trading Currency
			
			
			SGD counter
			
			
			USD counter
			
			
			CNY counter
			
		


			RIC and BBG Ticker
			
			
			NIIC.SI

			ZHS SP Equity
			
			
			NIIC-D.SI

			ZHD SP Equity
			
			
			NIIC-D1.SI

			ZHY SP Equity
			
		


			Trading Lot Size
			
			
			10 shares (~S$1/share)
			
			
			10 shares (~US$0.7/share)
			
			
			10 shares

			(~CNY5/share)
			
		


			Tick Size
			
			
			S$0.001
			
			
			US$0.001
			
			
			CNY 0.01
			
		

 
			 
			 
			 
			 
		

 

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.  
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.  
To find out more about Fixed Income ETFs, click here.



Gain Direct Exposure to the World’s 2nd Largest Bond Market

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Industrial and Commercial Bank of China Limited provides banking services. The Company offers deposits, loans, fund underwriting, foreign currency settlement, and other services. Industrial and Commercial Bank of China provides its services to individuals, enterprises, and other clients.

ICBC (H) (1398 HK)

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Gain Direct Exposure to the World’s 2nd Largest Bond Market

The NikkoAM-ICBCSG China Bond ETF will be listed on the Singapore Exchange on 24 November 2020, offering investors low cost and direct access...

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