ETFs come to China with a vengeance

Hong Kong, a British colony from the 1840s to 1997, grew into an international finance center just off the coast of mainland China. A stock connect launched in 2014, followed by other systems linking Hong Kong’s market closer with the mainland’s.

Exchange-traded funds are an investment product that lets traders buy and sell a basket of stocks.

After the financial crisis, the funds became popular in the U.S. and built a $3 trillion business.

In mainland China, the stock market has not grown as fast as the exchange traded funds. The number of exchange traded funds more than doubled to , while the number of stocks barely budged.

According to official data and a report from Hong Kong Exchanges and Clearing, the mainland's exchange traded funds market has tripled in size in five years.

The exchange traded fund market to overseas investors via Hong Kong was opened on Monday.

ChinaAMC launched the first exchange traded fund on the mainland in 2004, and operates 10 of the funds that are eligible for trading under the new cross-border trading program. Semiconductor development is one of the themes included in the ones.

The mainland leans towards the ETFs connect. Only four of the initial batches of eligible ETFs are listed in Hong Kong.

Goldman says there will be more purchases of mainland assets over the next decade.

Adding Northbound Exchange Traded Funds to one's A-share portfolio could potentially expand the efficient frontier and improve the risk/reward. The initial Southbound eligible universe looks narrow, but still offers mainland investors broad exposure to HK-listed Internet and Financial stocks.

There are internet tech companies in Hong Kong, but not in the mainland. Many China focused companies are listed on the mainland.

The ChinaAMC fund manager said in a statement that one of the things the ETFs connect can do is boost international investors' understanding of mainland China ETFs. The quantitative investment department is managed by Xu.

According to ChinaAMC, it had more than 300 billion in managed assets by the end of the year.

Chinese regulators announced a new program that will allow investment in financial derivatives on the mainland via Hong Kong in about six months.

mainland investors will be able to trade financial derivatives in Hong Kong.

The moves to connect Hong Kong and mainland markets are in line with similar programs for stocks and bonds that started in the same year. The world's second- largest stock market is located in mainland China.

Financial firms are coming to the market with a focus on greater China clients who want to invest in Hong Kong.

A health care stock index with FactSet was launched last week by a Hong Kong-based wealth manager.

The shares of companies listed in Europe or North America are tracked by the FactSet hywin global health care index.

The index is going to be listed in Hong Kong.

More than 130,000 clients of Hyden are found in Asia, and they find the world very fluid. Nick Xiao, vice president and CEO of the firm's overseas business, said that they want to capture opportunities but they are not sure about picking the stock and timing.

Xiao said he expects more collaboration with FactSet to create indexes and exchange traded funds. There are at least eight Hong Kong-based exchange traded funds that track FactSet index.

More than 40% of institutional investors and money managers in Greater China said they invested more than half of their assets in exchange traded funds.