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Last Updated: Wed, Mar 17, 2010 03:07 hrs

Hang Seng ETF to list on the National Stock Exchange on Thursday.

FIIs invest Rs 89,500 cr in equities in April-Dec ’09-10

Indian investors will soon be able to take exposure to Chinese and Hong Kong markets by trading in an exchange-traded fund (ETF) that tracks the Hang Seng index. The Hang Seng Benchmark Exchange Traded Fund (Hang Seng BeES) will be listed on the National Stock Exchange (NSE) on March 18.

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"We have raised around Rs 55 crore in the fund from retail and institutional investors," said Rajan Mehta, executive director, Benchmark Mutual Fund, the fund house which is launching the index. The fund was open for public subscription between February 15-24. He said the fund would help Indian investors take exposure to Chinese companies.

Close to 50-60 per cent components of the Hang Seng Index are Chinese companies. Some of the leading companies in the index are Bank of China, China Life Insurance Company, China Mobile, Petro China and CNOOC. These five alone have a weight of over 25 per cent in the index.

In the last one year, the Hang Seng index has gained more than 55 per cent, while the Shanghai Composite index has risen 25 per cent. This is much lower than the rise of India’s benchmark, the 30-share Sensex, which has risen 94 per cent in the period. The Hang Seng index includes 42 largest listed companies of Hong Kong, representing around 60 per cent of the total market capitalisation. An exchange-traded fund tracks an index, Hang Seng in this case, and can be bought or sold just like shares on the exchange.

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According to NSE, the issue price for each unit of Hang Seng BeES has been fixed at Rs 1,238.89. Hang Seng BeES is an open-ended index scheme that tracks the Hang Seng on a real-time basis. Further, trading in Hang Seng BeES will not attract securities transaction tax as the scheme is classified as non-equity fund.

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