2015 review—ETF market expands rapidly

2016. 1. 4 Asia Pacific ETFs 2015 review—ETF market expands rapidly ETF assets expand rapidly: Assets in the Asia Pacific ETF market at end-2015 were up USD47.3b from end-2014’s total of USD211b, and the number of ETFs listed in the region hit 1,006, up 38% y-y from 755. According to ETFGI, ETF assets worldwide exceeded USD3t as of Nov 2015, with a total of 6,104 listed products (including ETNs), meaning the Asia Pacific market accounted for 8% of the global one in terms of assets and 16% in terms of number of products. Equity-and bond-type ETFs comprised a respective 91% and 4% of the products in the Asia Pacific region, with assets in the former increasing 20% from USD196.9b at end-2014 to USD236.6b at end-2015, while those in the latter grew 22% y-y from USD9.1b to USD11.1b. ETF market by nation: Japan’s ETF assets grew the most, rising from USD89b at end-2014 to USD136b at end-2015, attributable to the Bank of Japan’s asset purchase program, advances in stock markets there, and capital inflows from abroad. Assets in China’s ETF markets (Shanghai and Shenzhen) grew 31% from USD23.6b at end-2014 to USD31b at end-2015, while those in Hong Kong and Singapore contracted a respective 15% and 24% y-y to USD37.6b and USD14.9b. ETF asset growth was pronounced in countries with small ETF markets—eg, it hit 114% y-y in New Zealand, 37% y-y in Malaysia, and 27% y-y in both Australia and Taiwan. In Korea, assets edged up USD0.2b y-y to USD18.4b despite the introduction of a number of ETNs. Winners and losers: Korea’s healthcare sector ETF gained the most in 2015, rising 102%. Also performing well were tech/small-cap ETFs in China, healthcare sector ones in multiple countries, and oil refining/construction ones in Korea. Japan’s crude oil leverage ETF lost the most as plummeting oil prices led related ETFs in the region to plunge. ETFs linked to energy, non-ferrous metals, and natural gas also struggled last year, as did ones in Korea’s shipbuilding/marine sector those linked with stocks in Latin America. 2016 outlook: Stock markets globally in 2016 should face similar environments—eg, rate hikes, economic slowdowns in EMs, increasing volatility, and commodity market uncertainties—suggesting performances will diverge (eg, between stocks/bonds and DMs/EMs) and that market volatility and correlations of countries’ performances will move in the same direction. Accordingly, investors in Asia Pacific ETF markets should be mindful of: 1) risk parity [asset allocation]; 2) volatility control [investment strategy]; and 3) short-term rotation [investment period]. Three key investment themes for 2016 should be: 1) equity-type ETFs centered on quality factors; 2) bond ETFs centered on variable interest rates; and 3) commodity ETFs centered on agricultural products. ETF News 2016. 1. 4 2 Asia-Pacific ETFs ETF listings Note: As of Dec 31; based on existing ETFs Source: Bloomberg, Samsung Securities ETF listings, by exchange Exchange 2006200720082009201020112012201320142015Australia 14151220101116Bangkok 11115354Hong Kong 1361220829111211Indonesia 11231Korea 8515181644291636108Bursa Malaysia 1121Mumbai 1Ho Chi Minh 111Nagoya 1N.S. India 632872447New Zealand 2Osaka 222612Philippines 1Shanghai 112711618112Shenzhen 261141423Singapore 2152242Taiwan 24415344Tokyo 43613187201829Total 1625825096127108102110181Note: As of Dec 31; based on existing ETFs Source: Bloomberg, Samsung Securities 7619374520304650725569395745486273980204060801001202H061H072H071H082H081H092H091H102H101H112H111H122H121H132H131H142H141H152H15(No of products) ETF News 2016. 1. 4 3 Asia-Pacific listed ETFs, by asset class Asset class AUM (USDm)Number of ETFsEquity 236,646 758Fixed Income 11,113 83Money Market 4,873 81Commodity 3,705 6Specialty 1,406 67n/a 473 4Mixed Allocation 143 7Total 258,359 1006Note: As of Dec 31 Source: Bloomberg, Samsung Securities AUM of ETFs, by exchange and asset class (USDm) CommodityEquityFixed IncomeSpecialtyMixed AllocationMoney MarketTotalASE 363 7,636 1,342 375 9,717 Bangkok 33 101 134 BSE India 131 131 Hanoi 4 4 Ho Chi Minh 16 16 Hong Kong 104 33,783 3,746 61 37,694 Indonesia 150 150 Korea 312 13,369 3,859 811 82 18,432 Malaysia 87 312 399 N.S. India 881 1,423 136 2,440 Nagoya 37 37 New Zealand 654 - - 654 Philippines 29 29 Shanghai 71 19,068 1,092 2,592 22,823 Shenzhen 171 6,899 33 1,113 8,216 Singapore 1,070 13,298 534 14,902 Taiwan 104 6,326 62 6,491 Tokyo 1,764 133,635 58 158 136,089 Total 4,873 236,646 11,113 1,406 616 3,705 258,359 ETF News 2016. 1. 4 4 AUM of listed ETFs, by exchange Primary exchange TotalAveragePrevious month-end (USDm) (USDm)(USDm)Tokyo 136,089 769 131,468 Hong Kong 37,694 340 37,915 Shanghai 22,823 321 23,171 Korea 18,432 95 18,370 Singapore 14,902 452 16,943 Shenzhen 9,717 99 9,387 Australia 8,216 183 8,329 Taiwan 6,491