Wall Street’s Newest Toy: South America’s First ETF Bridges Shanghai Gap

Bulls cheer as Latin America gets its first China-linked ETF—because what the world needs is another way to bet on volatile emerging markets.

Fund managers slap ’innovation’ label on what’s essentially a geographic arbitrage play. Shanghai’s markets get fresh capital inflows, while South American investors get... well, let’s call it ’exposure.’

Final thought: If past performance is any indication (it’s not), this’ll either mint new fortunes or become another case study in cross-border financial FOMO.

On May 26, the first product under ETF connectivity cooperation between Shanghai Stock Exchange (SSE) and Brasil, Bolsa, Balcão (B3) was listed for trading in Brazil.

The ETF was issued by Bradesco, an asset management company based in Brazil, and tracks the SSE-listed CSI 300 ETF product issued by China Universal Asset Management (CUAM). The launch of this ETF marks the first time for the ETF connectivity scheme to be implemented in the South American market, which opens an easy and efficient path for investors from the market to access China and share in the benefits of China’s economy.

The cooperation is made amid complex and ever-changing global landscape and rising challenges against international cooperation. It is the first time that the SSE partnered with the Americas market on ETF connectivity. The launch encourages investment companies in Brazil to raise exposure to China assets and will channel more local capital to the Chinese Mainland, which further demonstrates Brazilian investors’ firm belief in China’s long-term economic prospect and steady improvement in foreign investors’ confidence towards China.

Since the signing of MOU regarding ETF connectivity cooperation on March 20 between the SSE and B3, the SSE has facilitated a number of asset management companies to conduct preparatory work in an orderly manner. With coordinated oversight of China Securities Regulatory Commission, the SSE will keep expanding the product scope under China-Brazil ETF connectivity scheme, providing plentiful investment tools for domestic and international investors to seize the emerging opportunities in China’s growing capital market.

Source: Shanghai Stock Exchange