BMO Global to of­fer HK ex­change-traded funds

China Daily (Canada) - - ACROSSAMERICA - By ZHANG XIN in Beijing zhangxin@chi­nadaily.com.cn

BMO Global As­set Man­age­ment, one of the fastest grow­ing Ex­change Traded Funds (ETF) providers glob­ally, has in­tro­duced three ETFs in Hong Kong, mak­ing it the first Cana­dian bank to launch ETFs in Hong Kong.

The ETFs are to be han­dled by BMO Global As­set Man­age­ment, a part of BMO Fi­nan­cial Group.

The three ETFs, in­clud­ing BMO Asia USD In­vest­ment Grade Bond ETF, BMO Hong Kong Banks ETF and BMO Asia High Div­i­dend ETF, listed on the main board of the Stock Ex­change of Hong Kong Limited (SEHK) on Nov 13.

BMO Hong Kong Banks ETF and BMO Asia High Div­i­dend ETF are the first ETFs that track NAS­DAQ in­dices in Hong Kong, while the BMO Asia USD In­vest­ment Grade Bond ETF is also the first ETFs in Hong Kong that tracks the Bar­clay Asia USD In­vest­ment Grade Bond In­dex.

The global in­vest­ment man­ager with 24 of­fices lo­cated in 14 coun­tries said it was con­fi­dent in de­vel­op­ing in­no­va­tive and re­spon­si­ble ETFs to Hong Kong in­vestors, to­gether with NAS­DAQ and Bar­clays.

The lead­ing provider of ETFs, which first in­tro­duced them in Canada in 2009, mainly fo­cuses on de­liv­er­ing high-in­come lev­els based on sus­tain­able un­der­ly­ing port­fo­lio yields.

Ac­cord­ing to Man­ag­ing Di­rec­tor Amit Prakash with the firm’s Hong Kong ETF team, the de­mand for in­come and growth may not be met by fixed in­come in­vest­ment alone in the low in­ter­est rate en­vi­ron­ment, and the div­i­dend-pay­ing stocks of­fer a com­pet­i­tive yield and growth po­ten­tial.

“In­vestors can cap­i­tal­ize on the rapid de­vel­op­ment of Asian cap­i­tal mar­kets and tap the growth story in the re­gion,” he said. “As one of the top ten largest fixed in­come ETF providers in the world, we un­der­stand the need for in­come.”

Both the bond and eq­uity ETFs launched will pay reg­u­lar div­i­dends, al­low­ing in­vestors to earn in­come while ben­e­fit­ing from Asia’s con­tin­ued growth, he said.

Prakash said the company holds a pos­i­tive out­look for the re­gion’s econ­omy and cap­i­tal mar­kets and more specif­i­cally, the fi­nan­cial ser­vices sec­tor.

“We have seen a shift from com­pa­nies us­ing bank loans to fi­nanc­ing ex­pan­sion through cap­i­tal mar­ket ac­tiv­ity and our ETFs al­low in­vestors to par­tic­i­pate in th­ese un­der­ly­ing trends through prod­ucts which of­fer long-term cap­i­tal preser­va­tion and ap­pre­ci­a­tion po­ten­tial,” he said.

The re­cent agree­ment to es­tab­lish a Cana­dian Ren­minbi hub has also been applauded by many Cana­dian com­pa­nies, de­scrib­ing the joint ef­forts of the Cana­dian and Chi­nese gov­ern­ment as fan­tas­tic news for com­pa­nies from both coun­tries.

“The trad­ing hub will en­sure that Cana­dian firms do­ing business in China can pur­chase RMB on the open mar­ket with­out con­vert­ing to another cur­rency first,” said C.J. Gavsie, global head of FX Prod­ucts & China Cap­i­tal Mar­kets, BMO Cap­i­tal Mar­kets, who joined Canada Prime Min­is­ter Stephen Harper and Ed Fast, Canada’s min­is­ter of trade and min­is­ter for the Asia-Pa­cific Gate­way, at the an­nounce­ment in Beijing.

“As we’ve seen in other ju­ris­dic­tions, the cost sav­ings will lead to more trade,” said Gavsie. “This, in turn, will cre­ate more jobs for Cana­di­ans.”

If pat­terns seen in other global RMB hubs are repli­cated in Canada, to­tal trade could dou­ble or even triple be­tween Canada and China in the 12 months fol­low­ing the es­tab­lish­ment of a hub, he said.

The hub will also en­hance Canada’s brand around the world, he said.

Canada’s bank­ing sys­tem has al­ready been rated the sound­est in the world for the past seven years by the World Eco­nomic Fo­rum, he said.

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