Asia Pacific ETFs：AUM spikes in Asia Pacific

2016. 3. 31 Asia Pacific ETFs AUM spikes in Asia Pacific Asian markets stage relief rally: Asia Pacific stock markets have swung back into positive territory for the year as a relief rally swept the globe, largely thanks to efforts by major central banks to stabilize markets and rebounding oil prices since late February. Earlier in the year, increased forex volatility (especially in the yuan) and credit risk at European financial institutions triggered corrections in stock markets worldwide. In March, the Nikeei225 (Japan) gained 5% after losing 8% each in January and February; the Shanghai Composite Index (China) surged 12%; the BSE30 (India) and SET (Thailand) rose a respective 10% and 6%; the Kospi (Korea) and the TWSI (Taiwan) advanced 4% and 1%, respectively. Currencies in the region strengthened against the US dollar, lifted by expectations of the Fed slowing the pace of rate hikes. Inflows soar: Fund flows into emerging markets (EMs)—which were long mired in a slump—have surged since late February on heavy buying by risk-seeking investors encouraged by rebounding oil prices and containment of volatility by central banks in developed markets. Assets in the Asia-Pacific ETF market grew considerably in March, with those in: 1) Japan-listed ETFs soaring USD16b from end-February on the Bank of Japan’s negative interest rate and a rebounding stock market; and 2) Hong Kong-listed ETFs jumping USD3b. New Zealand, a relatively small market, saw ETF assets expand USD0.3b, a 46% rise from end-February levels. Newly listed ETFs: In 1Q, eight ETFs listed in Taiwan, including six leverage (including inverse) ones; three US dollar-hedged ETFs listed in Hong Kong; numerous smart beta ETFs listed in Korea; and only one style (quality) of ETF listed in Japan. The Korean market is the most advanced one in terms of new product development in the Asia Pacific region. Leverage and inverse ETFs surge: Among Japan’s top-ten ETFs that attracted the most funds in March, seven were leverage and inverse types, which attracted a combined USD2.6b (3-month average daily trading value)—equivalent to the total trading value at the Shenzhen stock exchange. Leverage and inverse ETFs also fared well in Korea and Taiwan, with five of them making it into the top ten in both countries. Leverage and inverse ETFs in Hong Kong and China are likely to attract the most funds in the Asia Pacific ETF market when they start trading in those markets. Downward volatility likely: With the Fed expressing concerns over increased global uncertainties, stock markets are likely to see downward volatility until around mid-2Q16. We expect Asia Pacific markets to rebound if risk assets keep flowing into EMs until mid-2Q and commodities keep rallying, led by oil price hikes. Still, we expect moderate volatility overall, leading us to advise investing selectively in Southeast Asian stocks, Japanese REITS, and US dollar-denominated ETFs. ETF News 2016. 3. 31 2 Asia-Pacific ETFs ETF listings Note: As of Mar 30; based on existing ETFs Source: Bloomberg, Samsung Securities ETF listings, by exchange Exchange 2007200820092010201120122013201420152016Australia 14151220101116Bangkok 11115354Hong Kong 3612208291112113Indonesia 11231Korea 51518164429163610812Bursa Malaysia 1121Mumbai 1Ho Chi Minh 111Nagoya 1N.S. India 632872447New Zealand 2Osaka 222612Philippines 1Shanghai 12711618112Shenzhen 61141423Singapore 152242Taiwan 44153448Tokyo 436131872018291Total 2582509612710810211018124Note: As of Mar 30; based on existing ETFs Source: Bloomberg, Samsung Securities 761937452030465072556939574548627398250204060801001202H061H072H071H082H081H092H091H102H101H112H111H122H121H132H131H142H141H152H151H16(No. of products) ETF News 2016. 3. 31 3 Asia-Pacific listed ETFs, by asset class Asset class AUM (USDm)Number of ETFsEquity 226,588 768Fixed Income 10,933 82Money Market 5,618 80Commodity 4,332 11Specialty 1,333 67N/a 475 6Mixed Allocation 161 8Total 249,440 1,022 Note: As of Mar 30 Source: Bloomberg, Samsung Securities AUM of ETFs, by exchange and asset class (USDm) CommodityEquityFixed incomeSpecialtyMixed allocationMoney marketTotalASE 430 7,399 1,458 354 9,641 Bangkok 35 102 137 BSE India 187 187 Hanoi 4 4 Ho Chi Minh 15 15 Hong Kong 119 28,651 3,404 53 32,228 Indonesia 140 140 Korea 367 14,084 3,761 758 110 19,080 Malaysia 85 329 414 N.S. India 903 1,540 142 2,585 Nagoya 32 32 New Zealand 637 - - 637 Philippines 26 26 Shanghai 115 21,185 1,141 3,676 26,118 Shenzhen 233 7,462 64 656 8,415 Singapore 1,023 11,715 571 13,308 Taiwan 423 6,495 52 6,970 Tokyo 1,970 126,830 62 168 475 129,506 Total 5,618 226,588 10,933 1,333 637 4,332 249,440 ETF News 2016. 3. 31 4 AUM of listed