Southbound ETF Connect to add 10 ETFs, including two CSOP funds

Southbound ETF Connect will expand to 41 ETFs from 31 on Nov. 9 after the Shanghai and Shenzhen stock exchanges published a 10-fund addition list on Oct. 30 that includes two CSOP funds.

Two CSOP funds are on the list. CSOP Nomura FTSE HK-Japan Equity Cash Flow Focus Index ETF (3535.HK) tracks the FTSE ETF Connect HK-Japan Cash Flow Focus Composite Index, and CSOP FTSE Asia Tech and Dividend Index ETF (3473.HK) tracks the FTSE ETF Connect Asia Tech & Succession Index.

Fund selectors allocating through southbound quotas get 10 more ETFs to choose from on Nov. 9. One of the CSOP additions is the first CSOP product with Japanese market exposure to be included in Southbound ETF Connect, according to ETF Express.

The 3535.HK index is designed within the framework of Hong Kong Stock Exchange's ETF Connect rules and covers Hong Kong-listed securities eligible for Stock Connect as well as Japan-listed securities. At rebalancing the allocation is held at caps of 65% Hong Kong-listed and 35% Japan-listed, with 30 and 50 constituents respectively, ETF Express reported.

Constituents named by the firm include China Mobile, CNOOC, Cathay Pacific, Honda, Canon and SoftBank. CSOP said the securities are selected for strong cash-flow characteristics and dividend yields, with the aim of a higher overall free cash flow yield for the index.

The 3473.HK index selects 23 Hong Kong-listed securities eligible for southbound trading under Stock Connect, ETF Express reported.

In the 3535.HK index, weight and breadth run opposite ways: Hong Kong-listed securities take 65% of the allocation, while Japan-listed ones supply 50 of the 80 constituents.