* Gives retail investors access to top 50 stocks
* Part of move to help mobilise Europe’s yuan holdings
* Deutsche Bank ETF on CSI300 to list next week
By Simon Jessop
LONDON, Jan 9 (Reuters) - ETF provider Source has launched a physically backed exchange-traded fund to track China’s A-shares market in Europe, giving many investors direct access to the country’s blue-chip stocks for the first time.
China is gradually opening its financial markets to international capital and has given quota-driven access to mainland markets to a number of asset managers, including Hong Kong-based CSOP Asset Management, partner to Source on the ETF.
ETFs are funds that track baskets of assets such as stocks or commodities and are listed on stock exchanges allowing investors to trade them like shares.
Named the CSOP Source FTSE China A50 UCITS ETF, the fund will trade on the London Stock Exchange and be open to both retail and institutional investors. Initial investment in the ETF totals 1.42 billion yuan ($234.66 million), Source said.
Source Chief Executive Ted Hood said in a statement the ETF “allows all investors - not just large institutions with their own investment quotas - to invest directly in one of the world’s most important equity markets.”
As a physical ETF, the pounds and dollars handed over by investors will be used to buy yuan, which will in turn be used to buy the actual shares of the 50 biggest Chinese blue-chips.
Following up the launch of the Source ETF, Deutsche Bank Asset & Wealth Management said recently it plans to list an ETF on Jan. 16 that will provide access to the broader CSI300 for the first time.
HSBC, which is acting as custodian bank for the Source ETF, said in a separate statement that it was the first to be listed in the UK using investment quota approved under the Renminbi Qualified Foreign Institutional Investor programme.
The programme, begun in 2011, is designed to help allow the large pools of yuan building up overseas to be put to work in mainland Chinese assets. Originally launched in Hong Kong, the programme has expanded to Taiwan, Singapore and London.
News of the ETF listing comes two days after fund manager Ashmore said it had been awarded a licence to invest directly in China from London, under the expanded RQFII programme.