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ADX and Shanghai bourse to get ETF link: The Abu Dhabi Securities Exchange (ADX) is set to welcome an exchange traded fund (ETF) tracking Chinese stocks, while Shanghai’s bourse will get an Arab company-tracking ETF that feeds into a separate Abu Dhabi-listed ETF, the Financial Times reports, citing statements from Italian asset manager Azimut Group. The Italian asset manager is launching the ETFs alongside China Universal Asset Management (CUAM), with the aim of giving Chinese and UAE investors access to each other’s stock markets as part of an ETF link program between China and the UAE.
The game plan for China’s ETF: Azimut will launch an ETF on the ADX investing in CUAM’s existing ETF listed on the Shanghai Stock Exchange (SSE), which tracks the CSI A500 index, tracking 500 mid-and-small-cap companies listed on the exchange. The FT did not disclose a timeline for the ETF’s launch.
What about Abu Dhabi’s ETF? CUAM will list a separate ETF on the Shanghai exchange, which will invest in an pan-Arab-focused ETF that Azimut is set to launch on the ADX. The ETF will be launched on the ADX by 3Q 2025.
We knew this was coming: Last year, the ADX and the Shenzhen Stock Exchange (SZSE) also inked an MoU to enhance cross-border investment and ETF cooperation between China and the UAE. In August, the Shenzhen Stock Exchange and Dubai Financial Market also inked another MoU for the same purpose.
This comes amid a wider context of China-based stock exchanges boosting their ties with Arab stock exchanges through ETFs. Other than the UAE, the SZSE also inked cooperation MoUs with Saudi and Qatari exchanges. This comes amid a surge of collaboration between China and the Middle East as they look to reduce dependence on financial systems and capital flows from the West.
The ADX has been getting a lot of Asian ETFs lately, with Lunate launching a Japanese ETF earlier in May and an Indian ETF in January. Chimera also launched its S&P China HK Shariah ETF, a Shariah-compliant ETF tracking Hong Kong-listed Chinese equities, in May 2023. The ETF went live on the ADX on 5 June.
OTHER CAPITAL MARKETS NEWS-
US’ Franklin Templeton launches eighth feeder fund in DIFC: US-based investment management firm Franklin Templeton launched the FTIFF Franklin India Fund, an addition to its existing fund range Franklin Templeton Investments Feeder Funds (FTIFF) in the Dubai International Financial Center (DIFC), Trade Arabia reported. The fund gives retail investors in the UAE access to “[India’s] positive growth prospects,” Amar Mehta, head of retail for Gulf, Eastern Mediterranean & Africa at Franklin Templeton is quoted as saying, without disclosing further details on the fund’s focus.
This adds to Franklin Templeton’s seven other feeder funds in the DIFC, launched earlier in July, in a bid to give retail investors access to global and regional fixed income assets, technology assets, and Shariah-compliant strategies. The seven feeder funds are available through onshore, conventional, and Shariah-compliant consumer banks, and were launched after the Securities and Commodities Authority (SCA) issued a decision in April prohibiting funds and asset managers outside of the UAE from being publicly offered for retail subscription in the UAE.
SOUND SMART- Domestic feeder funds — essentially a sub-fund that pools investment capital under a larger umbrella fund — are one way retail investors can gain access to foreign master funds.
