Geoff Howie of SGX explains some of the latest developments in the ETF space in Asia, including investor appetite and general market drivers.
Date: Aug 2011
Of these, Howie said 19 cover the triangle of developing Asia: the economies of China, India and ASEAN.
Drivers of investor participation
According to Howie, the demand to access overseas markets is driving individual investor participation in ETFs.
This is reflected in SGX’s shares of offshore, non-domestic listed ETFs, he explained – it has 45% of the market share of all non-domestic listed ETFs across Asia.
In addition, current core themes at work mean many investors want to attain some type of elasticity or access – whether this is technology in the US, emerging Asian industrialisation, or flight-to-quality with the store of value of gold, he explained.
Rapid growth in Asia
The simplicity of the product, which means ETF providers can have full transparency in relation to product descriptions, has been a key factor for the ETF market growing so rapidly in Asia, said Howie.
In addition, the world is looking to spread wealth into emerging markets, so ETFs are a good long-term instrument to facilitate such an investment decision.
South and South-east Asian exposure
Howie said he is seeing appetite for getting exposure to South-east Asia via ETFs focused on Indonesia and Vietnam, for example.
This is related to the realisation that developing Asia is not just about China, but also South-east Asia and India.