JSE lists first China focused ETF

The JSE, Johannesburg Stock Exchange, has recently listed its first China-focused Exchange Traded Fund, the Satrix MSCI China ETF. This new offering is set to track the MSCI China Index, providing investors with access to the broader Chinese equity market. Valdene Reddy, the Director of Capital Markets at the JSE, sat down with CNBC Africa to discuss the market timing and the interest generated by this innovative product. Reddy highlighted the importance of innovation and diversification during these times of uncertainty and volatility attributed to the COVID-19 pandemic. She credited the Satrix team for bringing this new ETF to market and emphasized the significance of offering alternative investment opportunities to both retail and institutional investors. The Satrix MSCI China ETF is a diversified index with exposure to various sectors including information technology, consumer discretionary, construction, real estate, and financial services. Noteworthy constituents of the index include tech giants Alibaba and Tencent, which collectively represent a significant portion of the index. Reddy shared that the IPO for the ETF exceeded expectations, garnering investor interest of 236 million rand across platforms and brokers. The growing relevance of China in global markets and the increasing interest in tech stocks have contributed to the success of the Satrix MSCI China ETF. Reddy pointed out that ETFs have seen significant growth, with the South African market witnessing a surge in trading volumes and investor participation. While forecasting returns over the next 12 months is challenging, Reddy emphasized the benefits of diversification and passive investing that the ETF offers. She highlighted the cost efficiency of ETF investing, citing economies of scale and the appeal of lower entry costs for investors. The launch of the Satrix MSCI China ETF aligns with the JSE's commitment to providing investors with access to innovative investment products. Reddy noted that ETFs have become a popular choice for a wide range of investors, including retail and institutional clients, offering them exposure to diversified portfolios like the China index. In conclusion, Reddy expressed optimism about the future growth potential of the ETF market in South Africa, highlighting the role of products like the Satrix MSCI China ETF in expanding investment opportunities and promoting a culture of savings and investment in the country.