China’s CSI, KRX to launch co-developed stock indices

China Securities Index Co. (CSI) and the Korea Exchange (KRX) are set to unveil three stock indices jointly developed for the first time on Dec. 20, while exchange-traded funds (ETFs) following those indices will be launched next year.

CSI, the index compiler jointly owned by the Shanghai and Shenzen exchanges, announced the launch of the CSI KRX China-Korea 50 Index, the CSI KRX China-Korea New Energy Vehicles Index, and the CSI KRX China-Korea Semiconductor Index.

The CSI KRX China-Korea 50 Index consists of the top 25 companies by market capitalization in each country with sub-indices of the CSI Large-cap Blue Chip 25 Index and the KRX Blue Chip 25 Index.

The CSI KRX China-Korea New Energy Vehicles Index is composed of 15 companies in the electric vehicle-related sectors including the battery business that are listed in both countries. The index also has sub-indices of the CSI New Energy Vehicles 15 Index and the KRX Electric Vehicle Top 15 Index.

The CSI KRX China-Korea Semiconductor Index consists of sub-indices the CSI Semiconductor 15 Index and the KRX Semiconductor Top 15 Index, containing 15 semiconductor-related companies in each country.

IN TALKS ON TIMING OF ETFS LAUNCH

In 2022, ETFs following those indices are to be launched, according to South Korea’s financial investment industry sources.

“We are in talks on if both countries list the ETFs at the same time since China allows them to be listed only after six months of an index launch,” said a KRX source. “If asset managers here list earlier, the ETFs will be launched in the first and second quarters next year.”

The KRX has been stepping up cooperation in the capital markets with its Chinese counterparts. In May, it signed a memorandum of understanding (MOU) with the Shanghai Stock Exchange (SSE) on joint development of indices and cross-listings of ETFs.

With the cross-listing, ETFs in South Korea will be able to be listed on the SSE through local asset management companies, while Chinese ETFs will be listed on the KRX through asset managers in South Korea.

Write to Hyung-gyo Seo at seogyo@hankyung.com
Jongwoo Cheon edited this article.