A stamp duty concession for ETFs was introduced in 2010, but it covered only those funds that track indices with less than 40% of Hong Kong constituent stocks. Since then, the exchange noted that the ETF listings in Hong Kong increased to 124 from 69 at the end of 2010.
Average daily ETF turnover has also increased substantially, rising to $4.7bn last year from $2.4 billion in 2010.
As a result, 26 of the 124 ETFs listed in Hong Kong are subject to stamp duty now, comprising roughly a quarter of total listed ETF turnover on the exchange, officials said.
The exchange added that the ETF contribution to HKEx’s securities market turnover nearly doubled to 6.9% last year from 3.5% in 2010.
The recently announced stamp duty waiver on all ETFs was proposed by the Hong Kong government in its budget in 2014 with the aim of reducing trading costs of the instruments.
“HKEx welcomes this initiative by the government and believes it will be another very positive development for Hong Kong as well as our financial markets,” said Charles Li, chief executive of the exchange.
“We had record ETF turnover last year and this change [stamp duty waiver] will make our ETF business even stronger.”
In Asia, the current distribution landscape and the commission-driven sales channels are major barriers to the development of the ETF market, noted PwC in a recent research note.
PwC projects the assets under management of global ETFs will double to $5trn by 2020, with Asia offering fragmented opportunities.
Recent developments like the Stock Connect and the ASEAN fund passpot could act as a catalyst for ETF growth in Asia.
