First Nasdaq-100 Index-linked Product to Be Traded in China

The first foreign index-linked financial product, the Nasdaq-100 index-linked product, is likely to be traded in China this year, according to China's Guotai Asset Management.

On Thursday, Guotai and the Nasdaq OMX Group, Inc. announced that Guotai has executed an exclusive licensing agreement with Nasdaq OMX to use the Nasdaq-100 index in the development of an exchange traded product in China.

The product is to be launched to China's domestic retail and institutional investors, Gerard DeBenedetto, an executive director of Guotai Asset Management, one of the original asset managers in China.

Subject to regulatory approval, this NASDAQ-100 Index-linked product will be the first foreign index-linked financial product traded in China.

It will be the first index-linked mutual fund product to be launched in China, which invests in overseas markets, said Guotai 's Managing Director Shelley Yang. Whether we called it a listed open-ended fund or exchange traded fund (ETF), it will depend on regulatory confirmation.

The procedure usually takes six to eight months. We already start the procedure, it moves smoothly on the track, we pipeline this into this year's project, Yang added.

Guotai, which was founded in 1998, is also an authorized manager for social security, corporate annuity, QDII, and segregate accounts in addition to a full spectrum of mutual fund products.

The announcement comes as demand for indexed overseas products in China is rapidly developing.

Domestic investors in China, who wish to invest in foreign capital markets, must do so through the Qualified Domestic Institutional Investor (QDII) program.

The QDII program, first announced in April 2006, is designed to allow certain institutions, subject to approval from the China Securities and Regulatory Commission, to offer funds which are invested in foreign securities.

The Nasdaq OMX Group, is one of the world's largest exchange company. So far more than 70 companies from mainland China have been listed on the Nasdaq market. 

Source: CRIEnglish