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Hong Kong’s CSOP AM sets sights on South Korea’s retail ETF market

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Hong Kong-based CSOP Asset Management is seeking approval from South Korea’s financial authorities to sell its exchange-traded funds to retail investors in the country, in a move that would become the first Chinese company to enter the domestic ETF space.

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CSOP AM, a Hong Kong-based subsidiary of China Southern Asset Management, has submitted applications to South Korea’s Financial Supervisory Service to register five ETFs.

It plans to launch the CSOP FTSE China A50 ETF, CSOP SZSE ChiNext ETF, CSOP Hang Seng TECH Index ETF, ICBC CSOP S&P New China Sectors ETF, and the ICBC CSOP FTSE Chinese Government Bond Index ETF managed by CSOP Singapore.

“These five ETFs were selected based on the demand we have seen from Korean investors in the past and the uniqueness of the products available in the Korean ETF market,” said Ding Chen, CEO of CSOP AM.

South Korea CSOP AM presents an opportunity to tap into a rapidly growing market. It had about 630 ETFs with assets of about 77.3 trillion won ($56.3 billion) in early November, a significant increase from the 13.4 trillion won held in about 130 funds in 2012, according to exchange data.

Experts said CSOP AM’s decision to enter South Korea’s competitive ETF market was unusual.

“It is rare for foreign managers to bring an overseas-listed fund to retail investors,” said Hwang Se-won, research fellow at the Korea Capital Market Institute.

Park Seong-jin, a senior analyst at Hana Securities in Seoul, said the move faced challenges because the CSOP AM brand name was unfamiliar to most retail investors.

South Korean investors have no shortage of existing China-focused ETFs to choose from, though they are all managed by local investment firms.

Nearly 40 Chinese-themed ETFs were listed on the Korea Stock Exchange as of Friday, according to the data exchange.

Investors can also buy funds listed in China through the Hong Kong-China ETF Connection, and work is underway to create a new ETF link linking the South Korean Stock Exchange to the Shanghai Stock Exchange.

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CSOP AM has already built some brand recognition with non-individual investors, who have access to overseas listed ETFs via brokerages, in the South Korean market over the past five years.

Since 2017, the company has been selling and marketing four ETFs to professional investors in South Korea, including the CSOP FTSE China A50 ETF, CSOP SZSE ChiNext ETF, CSOP Hang Seng TECH Index ETF, and CSOP CSI 500 ETF.

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