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.

Asia’s leading multi-asset exchange

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

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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SGX lists five China-focused ETFs that seek to replicate the total returns of major equity market indices in China. They are: Xtrackers CSI 300 Swap UCITS ETF, United SSE 50 China ETF, Xtrackers MSCI China UCITS ETF, Lyxor China Enterprise (HSCEI) UCITS ETF and Xtrackers FTSE China 50 UCITS ETF. 
	 </li>
	<li>
Over the 2019 calendar year, these five ETFs have averaged a total return of 25.1%, ranging from 41.9% to 15.5%. This brings their 1Y and 3Y annualised total returns to 4.1% and 6.1% respectively. 
	 </li>
	<li>Among the five ETFs, the three best performers over 2019 were: Xtrackers CSI300 Swap UCITS ETF, United SSE 50 China ETF and Xtrackers MSCI China UCITS ETF. The trio generated total returns of 41.9%, 31.1% and 23.5% respectively in USD over the period.</li>
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SGX lists five China-focused ETFs that seek to replicate the total returns of major equity market indices in China. They are: Xtrackers CSI 300 Swap UCITS ETF, United SSE 50 China ETF, Xtrackers MSCI China UCITS ETF, Lyxor China Enterprise (HSCEI) UCITS ETF and Xtrackers FTSE China 50 UCITS ETF.

Over the 2019 calendar year, these five ETFs have averaged a total return of 25.1%, ranging from 41.9% to 15.5%. This brings their one-year and three-year annualised total returns to 4.1% and 6.1% respectively. Management fees for these ETFs range between 0.45% to 0.65%, offering investors a low-cost option to partake in China’s growth and development.

Among the five ETFs, the three best performers over the last calendar year were: Xtrackers CSI300 Swap UCITS ETF, United SSE 50 China ETF and Xtrackers MSCI China UCITS ETF. The trio has generated total returns of 41.9%, 31.1% and 23.5% respectively in USD over the period.

However, since the start of 2020, the five ETFs have chalked up negative total returns on the back of slower growth forecasts for China and the global outbreak of the 2019 novel coronavirus.

The table below details the five China-focused ETFs listed on SGX, sorted by 2019  total return. 
 

<table class="table table-striped"><tbody>
<tr>
<td>
			<a>Name</a>
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Total Return 2019 (%)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y Annualised (%)
			</td>
			<td>
			Total Return 3Y Annualised (%)
			</td>
			<td>
			Trading Currency
			</td>
		</tr>
<tr>
<td>
			Xtrackers CSI300 Swap UCITS ETF
			</td>
			<td>
			KT4
			</td>
			<td>
			41.9
			</td>
			<td>
			-9.9
			</td>
			<td>
			15.6
			</td>
			<td>
			8.6
			</td>
			<td>
			USD
			</td>
		</tr>
<tr>
<td>
			United SSE 50 China ETF
			</td>
			<td>
			JK8
			</td>
			<td>
			31.1
			</td>
			<td>
			-9.7
			</td>
			<td>
			7.5
			</td>
			<td>
			0.8
			</td>
			<td>
			SGD
			</td>
		</tr>
<tr>
<td rowspan="2">
			Xtrackers MSCI China UCITS ETF*
			</td>
			<td>
			LG9
			</td>
			<td rowspan="2">
			23.5
			</td>
			<td rowspan="2">
			-5.7
			</td>
			<td rowspan="2">
			4.9
			</td>
			<td rowspan="2">
			10.7
			</td>
			<td>
			USD
			</td>
		</tr>
<tr>
<td>
			TID
			</td>
			<td>
			SGD
			</td>
		</tr>
<tr>
<td>
			Lyxor China Enterprise (HSCEI) UCITS ETF
			</td>
			<td>
			P58
			</td>
			<td>
			13.3
			</td>
			<td>
			-7.8
			</td>
			<td>
			-4.2
			</td>
			<td>
			4.2
			</td>
			<td>
			USD
			</td>
		</tr>
<tr>
<td>
			Xtrackers FTSE China 50 UCITS ETF
			</td>
			<td>
			HD8
			</td>
			<td>
			15.5
			</td>
			<td>
			-8.2
			</td>
			<td>
			-3.3
			</td>
			<td>
			6.0
			</td>
			<td>
			USD
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			25.1
			</td>
			<td>
			-8.3
			</td>
			<td>
			4.1
			</td>
			<td>
			6.1
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg (data as of 4 Feb 20)

*Dual trading counters available; total return based on USD counter

The table below details the five China-focused ETFs on SGX, their underlying stock indexes and ETF constituents.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			Underlying Equity Index
			</td>
			<td>
			ETF Constituents
			</td>
		</tr>
<tr>
<td>
			Xtrackers CSI300 Swap UCITS ETF
			</td>
			<td>
			CSI 300 Index TRN Index
			</td>
			<td>
			Top 300 companies listed on Shanghai and Shenzhen Stock Exchanges (China A shares)
			</td>
		</tr>
<tr>
<td>
			United SSE 50 China ETF
			</td>
			<td>
			SSE 50 Index
			</td>
			<td>
			50 largest stocks of good liquidity listed on the Shanghai Stock Exchange ("SSE").
			</td>
		</tr>
<tr>
<td>
			Xtrackers MSCI China UCITS ETF
			</td>
			<td>
			MSCI China TRN Index
			</td>
			<td>
			Large- and mid-cap Chinese companies (includes H shares, B shares, Red Chips, P Chips and foreign listings)
			</td>
		</tr>
<tr>
<td>
			Lyxor China Enterprise (HSCEI) UCITS ETF
			</td>
			<td>
			Hang Seng China Enterprises Index Net TRN Index
			</td>
			<td>
			H-Shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index.
			</td>
		</tr>
<tr>
<td>
			Xtrackers FTSE China 50 UCITS ETF
			</td>
			<td>
			FTSE China 50 TRN Index
			</td>
			<td>
			Top 50 Chinese companies listed on Hong Kong Stock Exchange
			</td>
		</tr>
</tbody></table>
 Source: StockFacts &amp; SGX

Note: Red chips refer to companies that are based in Mainland China but incorporated internationally and listed on HKEx; P chips refer to Chinese companies listed on HKEx that are incorporated in the Cayman Islands, Bermuda and the British Virgin Islands with operations in Mainland China, run by private sector Chinese businessmen.

China’s Growth Outlook

Even before the coronavirus outbreak, China’s economy was already slowing on the back of weak domestic demand and the fallout from the US-Sino trade war. GDP expanded 6.1% last year, the slowest in almost three decades, and just within the range targeted by President Xi Jinping’s administration.

As of this week, the global death toll from the virus outbreak has breached the 1,000-mark, surpassing that of the 2003 SARS epidemic, with majority of fatalities coming from China. The People’s Bank of China has announced stimulus plans to counter the impact, including providing special re-lending funds.

Last month, US and China sealed the first phase of a trade agreement that is supposed to take effect in mid-February. It has a clause that states the nations will consult “in the event that a natural disaster or other unforeseeable event” delays either from complying with the accord.

The Economist Intelligence Unit (EIU) said it plans to revise its economic growth forecasts for China on the assumption that the country’s public health emergency will come under control by end-March – a scenario with 50% probability of materialising, its <a href="http://country.eiu.com/China">report</a> released last week showed.

Under this core scenario, it provisionally plans to cut China's real GDP growth projection in 2020 to 5.4% from 5.9%. Stimulus policies will cushion some of the economic disruption caused by the virus outbreak, and the second half of 2020 should see a recovery in activity. Nonetheless, there’s a possibility the virus will take longer to be brought under control, or will even prove uncontainable, and such eventualities would have a long-term economic impact, it added.

The scale of the impact from the coronavirus outbreak on China’s economic growth this year remains uncertain, Fitch Ratings said in a <a href="https://www.fitchratings.com/site/pr/10109959">report</a> released last week.

While the SARS outbreak provides a useful benchmark, there are significant differences between the two epidemics. Notably, the novel coronavirus (2019-nCoV) has spread faster than SARS, and official travel and workplace activity restrictions have been more aggressive. “These factors suggest the impact of the current outbreak on economic activity on a daily basis may be more intense than SARS, but impact on GDP will also depend on the length of time taken to contain the virus,” the report added.
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-02/China%20Growth%20Scenarios.PNG' alt='China Growth Scenarios' />
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 <div class='content-caption'>China Growth Scenarios</div>
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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.

Investors can also invest in the STI ETFs using a Regular Shares Saving Plan (RSS). Click here to find out more. To find out more about ETFs, visit <a href="www.sgx.com/etf">www.sgx.com/etf</a>.
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SGX lists five China-focused ETFs that seek to replicate the total returns of major equity market indices in China. They are: Xtrackers CSI 300 Swap UCITS ETF, United SSE 50 China ETF, Xtrackers MSCI China UCITS ETF, Lyxor China Enterprise (HSCEI) UCITS ETF and Xtrackers FTSE China 50 UCITS ETF. 
	 
	
Over the 2019 calendar year, these five ETFs have averaged a total return of 25.1%, ranging from 41.9% to 15.5%. This brings their 1Y and 3Y annualised total returns to 4.1% and 6.1% respectively.  
	 
	Among the five ETFs, the three best performers over 2019 were: Xtrackers CSI300 Swap UCITS ETF, United SSE 50 China ETF and Xtrackers MSCI China UCITS ETF. The trio generated total returns of 41.9%, 31.1% and 23.5% respectively in USD over the period.

 

SGX lists five China-focused ETFs that seek to replicate the total returns of major equity market indices in China. They are: Xtrackers CSI 300 Swap UCITS ETF, United SSE 50 China ETF, Xtrackers MSCI China UCITS ETF, Lyxor China Enterprise (HSCEI) UCITS ETF and Xtrackers FTSE China 50 UCITS ETF.

Over the 2019 calendar year, these five ETFs have averaged a total return of 25.1%, ranging from 41.9% to 15.5%. This brings their one-year and three-year annualised total returns to 4.1% and 6.1% respectively. Management fees for these ETFs range between 0.45% to 0.65%, offering investors a low-cost option to partake in China’s growth and development.

Among the five ETFs, the three best performers over the last calendar year were: Xtrackers CSI300 Swap UCITS ETF, United SSE 50 China ETF and Xtrackers MSCI China UCITS ETF. The trio has generated total returns of 41.9%, 31.1% and 23.5% respectively in USD over the period.

However, since the start of 2020, the five ETFs have chalked up negative total returns on the back of slower growth forecasts for China and the global outbreak of the 2019 novel coronavirus.

The table below details the five China-focused ETFs listed on SGX, sorted by 2019  total return. 
 




			Name
			
			
			SGX Code
			
			
			Total Return 2019 (%)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y Annualised (%)
			
			
			Total Return 3Y Annualised (%)
			
			
			Trading Currency
			
		


			Xtrackers CSI300 Swap UCITS ETF
			
			
			KT4
			
			
			41.9
			
			
			-9.9
			
			
			15.6
			
			
			8.6
			
			
			USD
			
		


			United SSE 50 China ETF
			
			
			JK8
			
			
			31.1
			
			
			-9.7
			
			
			7.5
			
			
			0.8
			
			
			SGD
			
		


			Xtrackers MSCI China UCITS ETF*
			
			
			LG9
			
			
			23.5
			
			
			-5.7
			
			
			4.9
			
			
			10.7
			
			
			USD
			
		


			TID
			
			
			SGD
			
		


			Lyxor China Enterprise (HSCEI) UCITS ETF
			
			
			P58
			
			
			13.3
			
			
			-7.8
			
			
			-4.2
			
			
			4.2
			
			
			USD
			
		


			Xtrackers FTSE China 50 UCITS ETF
			
			
			HD8
			
			
			15.5
			
			
			-8.2
			
			
			-3.3
			
			
			6.0
			
			
			USD
			
		


			Average
			
			
			 
			
			
			25.1
			
			
			-8.3
			
			
			4.1
			
			
			6.1
			
			
			 
			
		

 Source: Bloomberg (data as of 4 Feb 20)

*Dual trading counters available; total return based on USD counter

The table below details the five China-focused ETFs on SGX, their underlying stock indexes and ETF constituents.




			Name
			
			
			Underlying Equity Index
			
			
			ETF Constituents
			
		


			Xtrackers CSI300 Swap UCITS ETF
			
			
			CSI 300 Index TRN Index
			
			
			Top 300 companies listed on Shanghai and Shenzhen Stock Exchanges (China A shares)
			
		


			United SSE 50 China ETF
			
			
			SSE 50 Index
			
			
			50 largest stocks of good liquidity listed on the Shanghai Stock Exchange ("SSE").
			
		


			Xtrackers MSCI China UCITS ETF
			
			
			MSCI China TRN Index
			
			
			Large- and mid-cap Chinese companies (includes H shares, B shares, Red Chips, P Chips and foreign listings)
			
		


			Lyxor China Enterprise (HSCEI) UCITS ETF
			
			
			Hang Seng China Enterprises Index Net TRN Index
			
			
			H-Shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index.
			
		


			Xtrackers FTSE China 50 UCITS ETF
			
			
			FTSE China 50 TRN Index
			
			
			Top 50 Chinese companies listed on Hong Kong Stock Exchange
			
		

 Source: StockFacts &amp; SGX

Note: Red chips refer to companies that are based in Mainland China but incorporated internationally and listed on HKEx; P chips refer to Chinese companies listed on HKEx that are incorporated in the Cayman Islands, Bermuda and the British Virgin Islands with operations in Mainland China, run by private sector Chinese businessmen.

China’s Growth Outlook

Even before the coronavirus outbreak, China’s economy was already slowing on the back of weak domestic demand and the fallout from the US-Sino trade war. GDP expanded 6.1% last year, the slowest in almost three decades, and just within the range targeted by President Xi Jinping’s administration.

As of this week, the global death toll from the virus outbreak has breached the 1,000-mark, surpassing that of the 2003 SARS epidemic, with majority of fatalities coming from China. The People’s Bank of China has announced stimulus plans to counter the impact, including providing special re-lending funds.

Last month, US and China sealed the first phase of a trade agreement that is supposed to take effect in mid-February. It has a clause that states the nations will consult “in the event that a natural disaster or other unforeseeable event” delays either from complying with the accord.

The Economist Intelligence Unit (EIU) said it plans to revise its economic growth forecasts for China on the assumption that the country’s public health emergency will come under control by end-March – a scenario with 50% probability of materialising, its report released last week showed.

Under this core scenario, it provisionally plans to cut China's real GDP growth projection in 2020 to 5.4% from 5.9%. Stimulus policies will cushion some of the economic disruption caused by the virus outbreak, and the second half of 2020 should see a recovery in activity. Nonetheless, there’s a possibility the virus will take longer to be brought under control, or will even prove uncontainable, and such eventualities would have a long-term economic impact, it added.

The scale of the impact from the coronavirus outbreak on China’s economic growth this year remains uncertain, Fitch Ratings said in a report released last week.

While the SARS outbreak provides a useful benchmark, there are significant differences between the two epidemics. Notably, the novel coronavirus (2019-nCoV) has spread faster than SARS, and official travel and workplace activity restrictions have been more aggressive. “These factors suggest the impact of the current outbreak on economic activity on a daily basis may be more intense than SARS, but impact on GDP will also depend on the length of time taken to contain the virus,” the report added.



      
    
    China Growth Scenarios


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.

Investors can also invest in the STI ETFs using a Regular Shares Saving Plan (RSS). Click here to find out more. To find out more about ETFs, visit www.sgx.com/etf.



SGX’s Five China-Focused ETFs Average 25% Total Return in 2019