ETFs
China supports ETFs to boost state-owned enterprises
What is happening here?
China Reform Holdings has just announced an investment in ETFs that track Chinese state-owned enterprises (SOEs) listed in Hong Kong in order to support these companies and stabilize the market.
What does that mean?
ETFs, which track the CSI China Reform Hong Kong Connect Central-SOEs High Dividend The performance index includes large state-owned companies like oil giant CNOOC and coal mining company China Shenhua Energy. Co-compiled by China Reform Holdings and China Securities Index, the index focuses on core SOEs boasting strong industry positions, stable operations and high dividend yields. Managed by Invesco Great Wall, GF Fund Management and China Southern Active Management, these new ETFs align with Beijing’s strategic objectives. China’s assets regulator has urged state-owned companies to become more profitable and communicate better with investors, boosting efforts to make such companies leaner and more robust. China Reform Holdings stressed that this investment demonstrates strong optimism about the long-term value of central SOEs listed in Hong Kong.
Why should I care?
For the markets: Invest in stability.
China’s decision to support ETFs for state-owned enterprises aims to stabilize market dynamics and support state-owned enterprises, which are key to the country’s economic strategy. This investment could attract more interest in these companies, which could lead to increased market confidence and increased financial resilience.
The big picture: Strengthen the spine.
By strengthening state-owned enterprises through strategic investments and better investor relations, China is working to make its state-owned enterprises more globally competitive. This initiative aligns with broader economic reforms and could lead to a more robust and efficient public sector, promoting economic stability and long-term growth.