July 22, 2024 • 28 mins
Hong Kong’s ambition to become a cryptocurrency hub could get a boost with the launch of the Asia-Pacific region’s first inverse crypto exchange-traded fund (ETF). CSOP Asset Management Ltd. CEO Ding Chen shares her views on what’s next for crypto ETFs, where markets are headed, and where Asia’s outsized returns might lurk. Topics covered include the new China-Saudi Arabia ETF, recent fund launches, and the future of investing. David Ingles of Bloomberg Television and Rebecca Sin of Bloomberg Intelligence co-host the sixth installment of Tiger Money.
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Speaker 1 (00:00):
This podcast is brought to you by HKX, Asia's ETF marketplace. Well,
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Speaker 2 (00:17):
Good day or good evening to our listeners out there.
I guess it depends where in the worlds you're joining
us from. Welcome to Tiger Money, Bloomberg podcast about investing stocks, commodities, bonds,
crypto and everything in between, with a focus on exchange
traded funds in the Asia Pacific and also beyond. I'm
your host, David inglests chief Markets editor for the Asia
(00:39):
Pacific from Bloomberg TV and also hosted The China Show,
also of Bloomberg TV. And my co host is Rebecca
sin She is head of Asia Pacific ETF Research at
Bloomberg Intelligence. A kind housekeeping reminder of course for everyone,
if you like what you hear, do not forget to like,
to subscribe, and also to share without further ado. My
(01:00):
co pilot.
Speaker 3 (01:01):
Rebecca, thank you David. Today we're very excited to have
miss ding Chen, who is the CEO of CSOP asset Management.
Prior to that, she was the assistant CEO and Managing
director of China Southern Asset Management, one of the largest
fund management company in China. She issued the first and
largest QTI neutral fund in China. Thank you very much
(01:22):
for joining us here today. Missing I'm very excited to
have you here.
Speaker 4 (01:25):
Thank you Rebuka, and thank your David. Pleasure to be
here again.
Speaker 2 (01:29):
I guess just for our listeners who might not be
as familiar with the company and with yourself, could you
give our listeners a little bit of an introduction of yourself.
How long have you been in this role in the
industry in your career path up to this point.
Speaker 4 (01:43):
Thanks Davie. I work with C Sop as a CEO
since twenty ten and currently we are one of the
largest ETF issue in the region. Currently we're managing more
than forty ETFs across Hong Kong and also Singapore, and
the people will ask not only as ETF specialist, but
(02:05):
also across border expertise. We participate in various connect scheme
between Millian China and Hong Kong. We start doing ETF
twenty twelve and we're very lucky through our QF we
managed one of the largest China a ETF back to
that time, and we view us as a connector to
(02:28):
connect Mini in China and the rest of the world.
We provide China and Hong Kong ETF to the global investors.
They're using the ETF as a proxy to get access
to milli in China, helping Chinese capital markets, to geting
assets from outside of China to get investor into Minian China.
We are one of the largest in Hong Kong and
(02:50):
Sesul piece ETF stately work comes up about five percent
of the total turnover of Hong Kong markets.
Speaker 2 (02:56):
That's crazy, Yeah, that's well, how many strategies forty plus
forty plus, Yeah, it's like having forty children.
Speaker 3 (03:04):
They have forty seven ETFs in Hong Kong with twelve
billion in assets under management, and they launched the first
ETF in twenty twelve. So definitely, as David says, a
lot of children.
Speaker 2 (03:14):
Yeah, yeah, and more to come, I believe, yes.
Speaker 3 (03:18):
Yes, So you've been very busy in the region. You've
had a lot of new launches, but specifically today we
want to talk about this CSOP Bitcoin Future Daily Inverse ETF.
The crypto market has exploded this year. Globally, there's more
than one hundred billion in crypto ETPs with two hundred
and fifty two ETFs, and twenty seven percent of them
were actually launched this year. If we include twenty twenty three,
(03:41):
around forty two percent of new launches were in the
crypto space, and so a lot of new products coming.
Performance has been through the roof Bitcoin is up more
than fifty percent. There's talk that with a potential Trump presidency,
bitcoin is going to go over one hundred thousand. So
there's a lot of hype and interest into this. But
an interesting fact is that for inverse ETF, there's only
roughly one hundred and twelve million globally, and so appro
(04:04):
shares short Bitcoin. It's the main ETF with seventy million.
So your ETF that is brand new to the market,
can you tell us a little bit about it. You
could potentially have the largest inverse bitcoin ETF in the world.
Speaker 4 (04:16):
I hope we can achieve that. So obviously bitcoin is unfair.
Everybody's talking about bitcoin. It's a new phenomenon thing. And
we launched a future based ETF, which is a beta
ETF two years ago. At that time, bitcoin price is
seventeen thousand, so right now it's sixty four thousand something.
(04:37):
At that time, we feel like the market is bottoming.
We think bitcoin it's very important asset class. We try
to introduce this new asset class to our clients. At
this point, we try to introduce inverse ETF to the market.
And one of the most important reasons you already mentioned
(04:58):
because Donald Trump is obviously a big fun of bitcoin,
and people say, you know, the bitcoin price might go
to like one hundred thousand very soon, but right now
for bitcoin, it's not that easy to open a count
to trade futures to get an active position, or to
imverse to short bitcoin. So we try to introduce this
(05:20):
daily rebalanced, one time imverse ETF to the market.
Speaker 2 (05:25):
There's a ton of demand for this specific strategy as
part of broader strategies. Or if you take a simple
call and market direction, do you have an initial projection
of how much aum you think this specific product might
start to inhale.
Speaker 4 (05:41):
A M obviously is the most important thing for VIS
the managers, But right now we're doing leveraging inverse products.
Pretty much all of our leveraging imverse product, no matter
how big it is, we all start with very much
small seeding a day one something like five million to
ten million normally. Is that the starting point. And as
(06:02):
long as the market favors this sort of strategy, people
feel that this strategy has good liquidity can help them
either to enhance their risk or take other positions the
AOL Milk role. I think seventy million is not a
big number as three seven zero.
Speaker 3 (06:21):
So the current record is pro share short Bitcoin they
have seventy million, and across all inverse bitcoin ETPs globally
there's only one hundred and twelve million. And so in
terms of your estimate, do you see your Hong Kong
ETF being larger than this? Because when you mentioned you
launched your futures based spot bitcoin in two years ago
in twenty twenty two, at the time you had more
than one hundred million across both bitcoin and ether, and
(06:44):
so as one of the largest players, where's the AUM
coming from and what do you projected to be by
end of year? By in one year two years time for.
Speaker 4 (06:52):
The inverse one, it would be very interesting because it
is also the first inverse bitcoin ETF in Asia because
at that time we will introduce the future basic bitcoin
ETF I think the market is on the bottom and
right now with the huge rally, it's not that cheap.
So we think we can have decent numbers from here
(07:13):
at day one when we launched this inverse ETF. The
number won't be big, but I think fifty million one
hundred million is definitely a tubo giving us one or
two years easy work.
Speaker 2 (07:24):
As they say, are you expecting any competition?
Speaker 4 (07:27):
Well, of course, of course, yeah.
Speaker 2 (07:29):
How much in terms of fees are you charging for
this one? And do you expect competition to intensifying? How
do you look at fees moving forward? Then?
Speaker 4 (07:36):
So for this one, the fee is one point nine
nine percent, It's like one hundred and ninety nine basis
point from a lot of people's view, is not cheap.
But for this it's not cheap, but it's interesting.
Speaker 2 (07:48):
But the only one in the market right, No, But.
Speaker 3 (07:51):
The thing is in the US they have an smp
CME Bitcoin Futures Daily two times leverage and it's the
largest leverage crypto ETF and it has one point seven
billion asset management and their management fee is one point
nine percent. Yeah, and so for leveraging inverse you can
charge more. People won't really be don take it.
Speaker 2 (08:11):
Yeah, Okay, Well I'm curious because I think Rebecca brought
up that some of your peers in the industry launched
spot bitcoin ETFs. Right, why didn't you guys do the
spot route and why did you go futures?
Speaker 4 (08:23):
For you?
Speaker 2 (08:23):
What did you join in the spot in that? I
remember that day that was a very big day also
for the broader sector, and I'm wondering why you guys
didn't join the spot one.
Speaker 4 (08:30):
So for CSOP, we have a house rules, like we're
only doing something we're comfortable with or we know we
can help investors for physical bitcoin ETF. So currently we
are not very comfortable internally because it's a new technology
and a lot of things we need to look at
(08:51):
that and also the ecosystem because you try to introduce
or issue a ETF you have to have a custodium
and pds and for those people we are familiar with
and some of them are already yet, so we have
to wait for all kind of bodies to get ready.
Speaker 3 (09:10):
So you guys are launching inverse bitcoin, but why not
inverse ether any plans in the pipeline for that?
Speaker 4 (09:16):
It's on the way. I think we're definitely, Yeah, we're
definitely working on it. Yes. Of course at the virtual
asset world, bitcoin obviously dominate quite a lot, so everything
goes it definitely will be like bitcoin first and either flop. Yeah,
so yeah, I'm.
Speaker 2 (09:35):
Wondering what you think as an industry player. A lot
of this is also regulation in Hong Kong has really
opened up to welcome virtual assets, and I'm wondering how
you would rate you know, the policy right now and
how how much of it is really leading to all
this innovation in the industry like yourself and perhaps more
in the future that we've seen from the Hong Kong government.
Speaker 4 (09:55):
Yeah, I think from the physical side of bitcoin and
either ETFs, Hong Kong is the only place that they
can using bitcoin physically to do the creation and redemption.
So even in US they are not they are only
allowed like cash creation and redemption. So from that point
(10:16):
of view, yes, Hong Kong is really leading all the
other regions and so we're very lucky to have this
environment to do more innovative in those areas.
Speaker 3 (10:29):
As a connector between Hong Kong and mainland China. A
lot of the funhouses that launched the spot bcoin, ETF
and Hong Kong in April. We're all Chinese asset management
house and it really came from the parent company. But
you can invest into crypto in mainland China. Do you
see this changing or do you have any insights into
this area?
Speaker 4 (10:50):
Yeah? I think from meinland China investment point of view,
it's still forbidden for them to invest into any sort
of big coin, the especial physical bitcoin or physical bitcoin
TF and I personally don't expect the regulation will losen
very soon.
Speaker 2 (11:11):
Correct me if I'm wrong, because a lot of this
is also nuance right, because we have a stock connect
that connects the exchange in Hong Kong to Sheen and Shanghai.
That stock connect allows investors on both sides of the
border to purchase or access certain securities in each of
these markets, but it's a limited pool from which they
can pick. And my understanding is, you know, for mainland
(11:32):
investors looking at home going into Hong Kong, are crypto
ETFs in Hong Kong is still not part of that
eligible pool?
Speaker 4 (11:40):
No, definitely not.
Speaker 3 (11:42):
Do you see that changing? If so? How long? If
at all?
Speaker 4 (11:46):
Yeah? I think you know. I'm not a regulator, so
it's basically it's not the question I can answer, but
I personally don't see any near future it will happen. Yeah,
I think it will still very difficult, right.
Speaker 2 (11:59):
I think that also goes on. I mean that's one
side of the coin. The other side is being in
Hong Kong. Of course, you're getting flows from all over
the world, all over the Asia Pacific, right, and you
guys being the first one to the game with this
inverse product, do you expect inflows coming through from the
Asia Pacific investors needing to for whatever reason, hedging or
taking a position simply? Are you expecting more flows to
(12:22):
come into the specific product.
Speaker 4 (12:23):
Yes, yes, I'm very positive on that, especially from regions
like Japan, Korean and even Singapore. You know a lot
of people are very very interested in this sort of products,
and also because of the Internet brokers, they can bring
those products across the border very easy.
Speaker 1 (12:42):
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Speaker 3 (12:58):
You're listening to Taigan Money. If you like what you
hear don't forget to subscribe, like and share just to
follow up on the Ether ETF. The reason why investors
are interested in Ether ETF is that the staking possibility.
Many investors are asking if staking is allowed, and it's
currently not in the US. For those that may not know,
if an Ether ETF issuer we're allowed to stake the Ether,
(13:22):
they can accumulate anywhere from four to five percent in
additional income. This number does fluctuate depending on the form
of rewards of how they secured the ethereum blockchain, but
this premium could be passed back on to the ETF,
and so that's why a lot of people are interested
in the Ether ETFs and specifically staking. Do you think
Hong Kong will allow this future?
Speaker 4 (13:43):
It's up to the regulator, the SFC is all they
look at that. But market rumas already says probably you
know tomorrow or someday US US yea, yes, any time, yeah, yeah,
anytime now, So probably we're watching there. Whether that feature
will be a lot from the US side.
Speaker 2 (14:04):
Right, I'm going to highlight it's the use of ETF
in this part of the world. It's very different from
what you see in the US market. Do we look
at the US market as you think where China and
Hong Kong the ET market will be in a few years.
Are we headed in that direction or do you think
we we're going to create some different path moving for
(14:25):
In other words, I'm trying to understand where things headed
over the next years and how you're planning for that
as a business too.
Speaker 4 (14:31):
US financial market is most the once financial market in
the world. There's no doubt so US leading quite a
lot of things in the area, especially in ETF is
the same thing. We can see from a lot of aspects.
US guest the largest um except Middle East, we have
one of the largest, and also you know Hong Kong.
(14:53):
Obviously we got the largest in Hong Kong in China.
And I think there's a lot of thing we can
learn from US market, and from my point of view,
i think in a relatively longer period of time, we're
still on the trend to learn from US. I think
it's also very healthy because no matter what kind of
(15:15):
financial products or instrument they have, like up and also
down and also the risk, So we can watch in
the US market play a little bit and then we
can sense about the risk and how we can do
it even better.
Speaker 2 (15:31):
AND's so called first mover disadvantage, as they say, right,
you watch and you see how you can improve it. Well,
since you mentioned Saudi, why didn't I ask you about it?
Because that's of course one of the newest Can you
give us just the backstory of how this all came?
You know, of course, the improving links between Greater China
and the Middle East. I know you've been making some
trips to Saudi a lot, several if I'm not mistaken,
(15:52):
the last couple of months. How did this all come
to be?
Speaker 4 (15:56):
The idea comes from the first trip I went to Saudi.
It's like one and a half years ago when I
first learned to Saudi, and I really like to sense
the market. I heard from some of my friends doing
business in Saudi. They told me that Saudi is really
a very place and also has huge potential, and they're
(16:18):
doing reforms, and I hope I can use my own
eyes to look at that and also to sense that.
And after my first visit to Saudi, I really really
buy in the story they have like Vision twenty thirty.
As a Chinese, you know, you are very very familiar
with those huge reform long term plans and allders of things,
(16:42):
and it's a very young population with a lot of
ambitious and the people are so well educated, and also
they learn from the development of the rest of world,
so they try to do the social and economic reform
and cucha. And when you'll be there, you will see,
(17:04):
you know, there's a lot of potentials. And look at
the capital markets, they only have like a right now,
it's like two hundred and forty. When I've first been there,
it's like two hundred and ten listed companies. And after
this a sense that it's like the Chinese capital market
situation twenty fifteen years ago. And then when I did
a little bit more research on that, I realized certainly
(17:27):
it is because given the historical reason. For instance, like
Saudi market they open from Sunday to Thursday. They close
at Friday and open at Sunday. So you can't imagine
how difficult it give us to international investors to do
the settlement and everything. It's headache, it's a huge headache.
(17:50):
But if we have a ETF as a proxy to
invest into Saudi. I listed this ETF a Hong Kong
sta Exchange and that was of quite a lot of
people's headache. So that's the reason we began to do
in research and to talk with our theaters and pds,
participan dinners and everybody in the ecosystem.
Speaker 2 (18:13):
I mean, it's it's early days, right, It's only been
several days since the debut of course of these ets,
and man have prices gone through the roof, I think,
and I mean we'll see it. Nothing goes up in
the straight line too.
Speaker 4 (18:24):
Oh you mean the domestic one, the domestic one. Yeah,
the domestic one is one the Minha and China domestic
one is through the cross listing scheme. We have two
partners in Minan, China, one in Shanghai, Wan and shin
Zin to list a feather fund. Each feeder funds to
fit to our Hong Kong Saudi ETF. Yeah, it's much
(18:48):
much easier for all Chinese partners to invest into Saudi.
Otherwise they were facing like working on Sunday and other things.
Speaker 2 (18:58):
Yeah.
Speaker 3 (18:59):
So in terms of this China, Shanghai, shen Chien, Saudi
Arabia connect for ETFs, when do you expect that this
will happen? Because now we're in the first few steps.
Products have been listed. When do you think it'll actually
come to fruition.
Speaker 4 (19:12):
I think it's coming. You know, it's not like a
pair of when China ETF goes to Saudi one Saudi
ETF comes to China. But right now we are already
step one or version one. We bring Saudi's ETF listed
on Hong Kong and then feeder funds listed on Shanji
and Shanghai. Our next step probably will bring Hong Kong
(19:36):
or China A listed on Saudi's capital markets. UH their
exchange is called tada Wu, so probably we can bring
Hong Kong ETF or Hong Kong products min and China
products to their.
Speaker 2 (19:49):
When we mentioned afsho on sure we know what we're
talking about. Hong Kong has this mel and China. I'm wondering,
when you go out into the rest of the world
and you have to talk about quote unquote the Chinese
stock market universe, do you feel like you still have
to there is some form of education that you have
to sort of undertake the difference between Hong Kong and
(20:11):
mainland China, the index constituency that you get here, the
difference in China, and I'm wondering how it is almost
to be an ambassador of the market, if I could
describe it that way.
Speaker 4 (20:23):
So for most of sophisticated investdors, you don't need to
tell them what's the difference between Mino China and Hong
Kong issues or edh yeers. But for the rest of them,
it's a mess. You know, when you talk quite a
lot about them, they just don't know. So what is
a then why there is a There is only like
Shanghai San Engines, so something like that. We are like
(20:45):
an ambassador of all those stacks, so we need to
tell them and sometimes we also joke about that. It's
like being in this industry. We have our jobs curity
quite safe. The reason is the whole system is so complicated. Yeah, yeah,
it's not that easy. So that's why you know, Hong
(21:07):
Kong has its value. When we bring institutional investors from
a board, they are very comfortable to go to Hong
Kong first because too complicated and.
Speaker 2 (21:17):
They're more familiar with Hong Kong it has the longer
history as being a market. Just to follow up on
that as well, a bit of a background for some
of our listeners, right, I studied in Shanghai. I was
there when things were opening up in the two thousands, right,
and I knew the some of the projects to make
Shanghai an international finance center. And then of course you
have Shanjen that has the aut exchange, and then you
have Hong Kong, and then of course Beijing has now
(21:39):
then the small caps gauge there. How do you think
it's all going to work out in the future longer
longer term? You have a market in Hong Kong, you
have separate financial centers in Changa and Shinjen. Do you
think all can coexist smoothly?
Speaker 4 (21:56):
Yeah? I think obviously there's a collaboration between those major
three stack changes shanghais Engine and Hong Kong, and also
they are facing competitions. But from my point of view,
I would say, you know, Shanghai Sanden obviously get their
value of course for domestic investors one hundred percent, but
(22:18):
Hong Kong is more international platform and we have a
lot of advantage in issuing some new things like bitcoin,
like inverse, becoin etf all sorts of things. They will
be functionally different if you ask me, I certainly think
from international point of view, I think Hong Kong has
(22:40):
its very strong value on that.
Speaker 3 (22:43):
Yeah, what's one tip you can give them on what
it takes to be successful ETF issue in the region,
because Asia is just so fragmented and so different.
Speaker 4 (22:51):
To the rest of the market for the ETF usual,
I think the most important thing is you need to
have commitment. You need to be dedicate. But if you
really want to, you know, have a successful business here,
you need to really really focus, to commit to the market,
to do a lot of investor education, and to do
(23:13):
a lot of marketing, you need to spend money, et cetera.
Speaker 2 (23:17):
Yeah, and maybe this the question is really to your
point on competition, right, is there space for a new entrance?
Is the question right? Or is this a market where
the bigger takes the bulk of the market share and
the to burrier are quite high or do you consider
them low.
Speaker 4 (23:34):
I think the entry barrier is high, to be honest,
but it's not saying, you know, there's no chance for
newcomer to come in. So for CESP, we are also newcomer, right.
We just launching ETF at twenty twelve. Before that, we
have zero experience in ETF. But we work very hard
and also smartly. We embrace innovative ideas and we get
(23:59):
the data is here right now, so I think from
that point of view, all the players has chance. But
in ETF definitely, you know, first move advantage, winner takes
all those rules applied.
Speaker 3 (24:13):
Moving on, we're going to do the fun questions now
missing You're on several boards, permanent honorary chairperson of the
Chinese Asset Management Association, which you started, Vice Chairman of
the Hong Kong Financial Service Development Council, and the list
goes on and on and on. How do you do
it all?
Speaker 4 (24:32):
Try my best, really try my best, because when I
began to start my career in Hong Kong to set
up these small companies or voice was difficult to be
heard by the regulators and everything, and they will form
the first Hong k Kong Association. So it's basically raising
(24:52):
voice to let the regulators know those newcomers, especially from
Milian China. As a managers, the difficulty facing and the
challenging wele facing. So I guess because of that, you
know you need to have your words to be heard
to represent your group of people. So I'm the one
to come here the artists, so naturally.
Speaker 3 (25:14):
You're very busy. What is one advice you give your
younger self ten years ago, I.
Speaker 4 (25:20):
Think still focus, focus, work harder.
Speaker 2 (25:24):
How do you keep the culture in your company entrepreneurial
in other words, like it almost has to always have
a startup spirit because you guys are trying new things
all the time. You're launching new strategies, and the bigger
you get, the more difficult I imagine it is for
you to share that it's probably you in your head,
you know in yourself, but being able to make your
(25:48):
team feel the same way that you do about the project,
it must be difficult.
Speaker 4 (25:55):
Yes, So for us, obviously we need that spirit to
try and use it thans and to move very fast.
It's a very fast environment and it's highly competitive environment
for ETF and we're very lucky we have the team.
We share the same dream and we treat people fairly.
(26:18):
Most of the people I would say in c SOP
they're very proud to be part of that. And we
do a lot of things together and we'll achieve quite
a lot of things together and people can share with
that joy. Everybody can share with that joy as well.
Like yesterday we went to San Zen to attend the
listing of fatter funds. Synthrones like change. You can see,
(26:42):
you know, the people occupy the stage take pictures are
all coming from SOOP guys. Actually it's the China thousands listing,
but CSOP will always make it like our own ETF
for listing. So you can sense that people are so
proud of the name of SOOP and they are part
of that. And I think every one of the team
(27:05):
members they find their own appropriate position. They contribute together,
not one or two superstars, but the whole team. Yeah.
Speaker 3 (27:13):
A fun fact for our listeners is I believe if
you work at CSOP you get free lunch every day.
That's what some of your employees tell me that they
really liked.
Speaker 4 (27:22):
Yeah, so people gain quite a lot of weight as well.
Speaker 3 (27:28):
Thank you so much for your time and insights. Missing.
We really enjoyed having you on this episode of Tiger Money,
and we look forward to continuing our conversation another time.
Speaker 4 (27:38):
Thank you so much. It'smi Prajer and.
Speaker 2 (27:40):
So all our listeners out there, thank you for joining us.
Today's an absolute blessing to have you spend your time here.
If you're listening to Tiger Money, you'r Bloomberg podcast about
investing funds and financial markets in Asia and beyond. If
you like what you hear, please do not forget to
subscribe to like, and to also share with your friends
and loved ones. And until next time, you can find
us inside the Bloomberg terminal or on LinkedIn. We look
(28:01):
forward to hearing from all of you. This podcast was
produced by Clara chep
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Speaker 2 (00:17):
Good day or good evening to our listeners out there.
I guess it depends where in the worlds you're joining
us from. Welcome to Tiger Money, Bloomberg podcast about investing stocks, commodities, bonds,
crypto and everything in between, with a focus on exchange
traded funds in the Asia Pacific and also beyond. I'm
your host, David inglests chief Markets editor for the Asia
(00:39):
Pacific from Bloomberg TV and also hosted The China Show,
also of Bloomberg TV. And my co host is Rebecca
sin She is head of Asia Pacific ETF Research at
Bloomberg Intelligence. A kind housekeeping reminder of course for everyone,
if you like what you hear, do not forget to like,
to subscribe, and also to share without further ado. My
(01:00):
co pilot.
Speaker 3 (01:01):
Rebecca, thank you David. Today we're very excited to have
miss ding Chen, who is the CEO of CSOP asset Management.
Prior to that, she was the assistant CEO and Managing
director of China Southern Asset Management, one of the largest
fund management company in China. She issued the first and
largest QTI neutral fund in China. Thank you very much
(01:22):
for joining us here today. Missing I'm very excited to
have you here.
Speaker 4 (01:25):
Thank you Rebuka, and thank your David. Pleasure to be
here again.
Speaker 2 (01:29):
I guess just for our listeners who might not be
as familiar with the company and with yourself, could you
give our listeners a little bit of an introduction of yourself.
How long have you been in this role in the
industry in your career path up to this point.
Speaker 4 (01:43):
Thanks Davie. I work with C Sop as a CEO
since twenty ten and currently we are one of the
largest ETF issue in the region. Currently we're managing more
than forty ETFs across Hong Kong and also Singapore, and
the people will ask not only as ETF specialist, but
(02:05):
also across border expertise. We participate in various connect scheme
between Millian China and Hong Kong. We start doing ETF
twenty twelve and we're very lucky through our QF we
managed one of the largest China a ETF back to
that time, and we view us as a connector to
(02:28):
connect Mini in China and the rest of the world.
We provide China and Hong Kong ETF to the global investors.
They're using the ETF as a proxy to get access
to milli in China, helping Chinese capital markets, to geting
assets from outside of China to get investor into Minian China.
We are one of the largest in Hong Kong and
(02:50):
Sesul piece ETF stately work comes up about five percent
of the total turnover of Hong Kong markets.
Speaker 2 (02:56):
That's crazy, Yeah, that's well, how many strategies forty plus
forty plus, Yeah, it's like having forty children.
Speaker 3 (03:04):
They have forty seven ETFs in Hong Kong with twelve
billion in assets under management, and they launched the first
ETF in twenty twelve. So definitely, as David says, a
lot of children.
Speaker 2 (03:14):
Yeah, yeah, and more to come, I believe, yes.
Speaker 3 (03:18):
Yes, So you've been very busy in the region. You've
had a lot of new launches, but specifically today we
want to talk about this CSOP Bitcoin Future Daily Inverse ETF.
The crypto market has exploded this year. Globally, there's more
than one hundred billion in crypto ETPs with two hundred
and fifty two ETFs, and twenty seven percent of them
were actually launched this year. If we include twenty twenty three,
(03:41):
around forty two percent of new launches were in the
crypto space, and so a lot of new products coming.
Performance has been through the roof Bitcoin is up more
than fifty percent. There's talk that with a potential Trump presidency,
bitcoin is going to go over one hundred thousand. So
there's a lot of hype and interest into this. But
an interesting fact is that for inverse ETF, there's only
roughly one hundred and twelve million globally, and so appro
(04:04):
shares short Bitcoin. It's the main ETF with seventy million.
So your ETF that is brand new to the market,
can you tell us a little bit about it. You
could potentially have the largest inverse bitcoin ETF in the world.
Speaker 4 (04:16):
I hope we can achieve that. So obviously bitcoin is unfair.
Everybody's talking about bitcoin. It's a new phenomenon thing. And
we launched a future based ETF, which is a beta
ETF two years ago. At that time, bitcoin price is
seventeen thousand, so right now it's sixty four thousand something.
(04:37):
At that time, we feel like the market is bottoming.
We think bitcoin it's very important asset class. We try
to introduce this new asset class to our clients. At
this point, we try to introduce inverse ETF to the market.
And one of the most important reasons you already mentioned
(04:58):
because Donald Trump is obviously a big fun of bitcoin,
and people say, you know, the bitcoin price might go
to like one hundred thousand very soon, but right now
for bitcoin, it's not that easy to open a count
to trade futures to get an active position, or to
imverse to short bitcoin. So we try to introduce this
(05:20):
daily rebalanced, one time imverse ETF to the market.
Speaker 2 (05:25):
There's a ton of demand for this specific strategy as
part of broader strategies. Or if you take a simple
call and market direction, do you have an initial projection
of how much aum you think this specific product might
start to inhale.
Speaker 4 (05:41):
A M obviously is the most important thing for VIS
the managers, But right now we're doing leveraging inverse products.
Pretty much all of our leveraging imverse product, no matter
how big it is, we all start with very much
small seeding a day one something like five million to
ten million normally. Is that the starting point. And as
(06:02):
long as the market favors this sort of strategy, people
feel that this strategy has good liquidity can help them
either to enhance their risk or take other positions the
AOL Milk role. I think seventy million is not a
big number as three seven zero.
Speaker 3 (06:21):
So the current record is pro share short Bitcoin they
have seventy million, and across all inverse bitcoin ETPs globally
there's only one hundred and twelve million. And so in
terms of your estimate, do you see your Hong Kong
ETF being larger than this? Because when you mentioned you
launched your futures based spot bitcoin in two years ago
in twenty twenty two, at the time you had more
than one hundred million across both bitcoin and ether, and
(06:44):
so as one of the largest players, where's the AUM
coming from and what do you projected to be by
end of year? By in one year two years time for.
Speaker 4 (06:52):
The inverse one, it would be very interesting because it
is also the first inverse bitcoin ETF in Asia because
at that time we will introduce the future basic bitcoin
ETF I think the market is on the bottom and
right now with the huge rally, it's not that cheap.
So we think we can have decent numbers from here
(07:13):
at day one when we launched this inverse ETF. The
number won't be big, but I think fifty million one
hundred million is definitely a tubo giving us one or
two years easy work.
Speaker 2 (07:24):
As they say, are you expecting any competition?
Speaker 4 (07:27):
Well, of course, of course, yeah.
Speaker 2 (07:29):
How much in terms of fees are you charging for
this one? And do you expect competition to intensifying? How
do you look at fees moving forward? Then?
Speaker 4 (07:36):
So for this one, the fee is one point nine
nine percent, It's like one hundred and ninety nine basis
point from a lot of people's view, is not cheap.
But for this it's not cheap, but it's interesting.
Speaker 2 (07:48):
But the only one in the market right, No, But.
Speaker 3 (07:51):
The thing is in the US they have an smp
CME Bitcoin Futures Daily two times leverage and it's the
largest leverage crypto ETF and it has one point seven
billion asset management and their management fee is one point
nine percent. Yeah, and so for leveraging inverse you can
charge more. People won't really be don take it.
Speaker 2 (08:11):
Yeah, Okay, Well I'm curious because I think Rebecca brought
up that some of your peers in the industry launched
spot bitcoin ETFs. Right, why didn't you guys do the
spot route and why did you go futures?
Speaker 4 (08:23):
For you?
Speaker 2 (08:23):
What did you join in the spot in that? I
remember that day that was a very big day also
for the broader sector, and I'm wondering why you guys
didn't join the spot one.
Speaker 4 (08:30):
So for CSOP, we have a house rules, like we're
only doing something we're comfortable with or we know we
can help investors for physical bitcoin ETF. So currently we
are not very comfortable internally because it's a new technology
and a lot of things we need to look at
(08:51):
that and also the ecosystem because you try to introduce
or issue a ETF you have to have a custodium
and pds and for those people we are familiar with
and some of them are already yet, so we have
to wait for all kind of bodies to get ready.
Speaker 3 (09:10):
So you guys are launching inverse bitcoin, but why not
inverse ether any plans in the pipeline for that?
Speaker 4 (09:16):
It's on the way. I think we're definitely, Yeah, we're
definitely working on it. Yes. Of course at the virtual
asset world, bitcoin obviously dominate quite a lot, so everything
goes it definitely will be like bitcoin first and either flop. Yeah,
so yeah, I'm.
Speaker 2 (09:35):
Wondering what you think as an industry player. A lot
of this is also regulation in Hong Kong has really
opened up to welcome virtual assets, and I'm wondering how
you would rate you know, the policy right now and
how how much of it is really leading to all
this innovation in the industry like yourself and perhaps more
in the future that we've seen from the Hong Kong government.
Speaker 4 (09:55):
Yeah, I think from the physical side of bitcoin and
either ETFs, Hong Kong is the only place that they
can using bitcoin physically to do the creation and redemption.
So even in US they are not they are only
allowed like cash creation and redemption. So from that point
(10:16):
of view, yes, Hong Kong is really leading all the
other regions and so we're very lucky to have this
environment to do more innovative in those areas.
Speaker 3 (10:29):
As a connector between Hong Kong and mainland China. A
lot of the funhouses that launched the spot bcoin, ETF
and Hong Kong in April. We're all Chinese asset management
house and it really came from the parent company. But
you can invest into crypto in mainland China. Do you
see this changing or do you have any insights into
this area?
Speaker 4 (10:50):
Yeah? I think from meinland China investment point of view,
it's still forbidden for them to invest into any sort
of big coin, the especial physical bitcoin or physical bitcoin
TF and I personally don't expect the regulation will losen
very soon.
Speaker 2 (11:11):
Correct me if I'm wrong, because a lot of this
is also nuance right, because we have a stock connect
that connects the exchange in Hong Kong to Sheen and Shanghai.
That stock connect allows investors on both sides of the
border to purchase or access certain securities in each of
these markets, but it's a limited pool from which they
can pick. And my understanding is, you know, for mainland
(11:32):
investors looking at home going into Hong Kong, are crypto
ETFs in Hong Kong is still not part of that
eligible pool?
Speaker 4 (11:40):
No, definitely not.
Speaker 3 (11:42):
Do you see that changing? If so? How long? If
at all?
Speaker 4 (11:46):
Yeah? I think you know. I'm not a regulator, so
it's basically it's not the question I can answer, but
I personally don't see any near future it will happen. Yeah,
I think it will still very difficult, right.
Speaker 2 (11:59):
I think that also goes on. I mean that's one
side of the coin. The other side is being in
Hong Kong. Of course, you're getting flows from all over
the world, all over the Asia Pacific, right, and you
guys being the first one to the game with this
inverse product, do you expect inflows coming through from the
Asia Pacific investors needing to for whatever reason, hedging or
taking a position simply? Are you expecting more flows to
(12:22):
come into the specific product.
Speaker 4 (12:23):
Yes, yes, I'm very positive on that, especially from regions
like Japan, Korean and even Singapore. You know a lot
of people are very very interested in this sort of products,
and also because of the Internet brokers, they can bring
those products across the border very easy.
Speaker 1 (12:42):
This podcast is brought to you by HKX Asia's ETF marketplace,
where you can get exposure to themes ranging from AI
to virtual assets, small cap to large cap Greater China
to global search HKX To learn more.
Speaker 3 (12:58):
You're listening to Taigan Money. If you like what you
hear don't forget to subscribe, like and share just to
follow up on the Ether ETF. The reason why investors
are interested in Ether ETF is that the staking possibility.
Many investors are asking if staking is allowed, and it's
currently not in the US. For those that may not know,
if an Ether ETF issuer we're allowed to stake the Ether,
(13:22):
they can accumulate anywhere from four to five percent in
additional income. This number does fluctuate depending on the form
of rewards of how they secured the ethereum blockchain, but
this premium could be passed back on to the ETF,
and so that's why a lot of people are interested
in the Ether ETFs and specifically staking. Do you think
Hong Kong will allow this future?
Speaker 4 (13:43):
It's up to the regulator, the SFC is all they
look at that. But market rumas already says probably you
know tomorrow or someday US US yea, yes, any time, yeah, yeah,
anytime now, So probably we're watching there. Whether that feature
will be a lot from the US side.
Speaker 2 (14:04):
Right, I'm going to highlight it's the use of ETF
in this part of the world. It's very different from
what you see in the US market. Do we look
at the US market as you think where China and
Hong Kong the ET market will be in a few years.
Are we headed in that direction or do you think
we we're going to create some different path moving for
(14:25):
In other words, I'm trying to understand where things headed
over the next years and how you're planning for that
as a business too.
Speaker 4 (14:31):
US financial market is most the once financial market in
the world. There's no doubt so US leading quite a
lot of things in the area, especially in ETF is
the same thing. We can see from a lot of aspects.
US guest the largest um except Middle East, we have
one of the largest, and also you know Hong Kong.
(14:53):
Obviously we got the largest in Hong Kong in China.
And I think there's a lot of thing we can
learn from US market, and from my point of view,
i think in a relatively longer period of time, we're
still on the trend to learn from US. I think
it's also very healthy because no matter what kind of
(15:15):
financial products or instrument they have, like up and also
down and also the risk, So we can watch in
the US market play a little bit and then we
can sense about the risk and how we can do
it even better.
Speaker 2 (15:31):
AND's so called first mover disadvantage, as they say, right,
you watch and you see how you can improve it. Well,
since you mentioned Saudi, why didn't I ask you about it?
Because that's of course one of the newest Can you
give us just the backstory of how this all came?
You know, of course, the improving links between Greater China
and the Middle East. I know you've been making some
trips to Saudi a lot, several if I'm not mistaken,
(15:52):
the last couple of months. How did this all come
to be?
Speaker 4 (15:56):
The idea comes from the first trip I went to Saudi.
It's like one and a half years ago when I
first learned to Saudi, and I really like to sense
the market. I heard from some of my friends doing
business in Saudi. They told me that Saudi is really
a very place and also has huge potential, and they're
(16:18):
doing reforms, and I hope I can use my own
eyes to look at that and also to sense that.
And after my first visit to Saudi, I really really
buy in the story they have like Vision twenty thirty.
As a Chinese, you know, you are very very familiar
with those huge reform long term plans and allders of things,
(16:42):
and it's a very young population with a lot of
ambitious and the people are so well educated, and also
they learn from the development of the rest of world,
so they try to do the social and economic reform
and cucha. And when you'll be there, you will see,
(17:04):
you know, there's a lot of potentials. And look at
the capital markets, they only have like a right now,
it's like two hundred and forty. When I've first been there,
it's like two hundred and ten listed companies. And after
this a sense that it's like the Chinese capital market
situation twenty fifteen years ago. And then when I did
a little bit more research on that, I realized certainly
(17:27):
it is because given the historical reason. For instance, like
Saudi market they open from Sunday to Thursday. They close
at Friday and open at Sunday. So you can't imagine
how difficult it give us to international investors to do
the settlement and everything. It's headache, it's a huge headache.
(17:50):
But if we have a ETF as a proxy to
invest into Saudi. I listed this ETF a Hong Kong
sta Exchange and that was of quite a lot of
people's headache. So that's the reason we began to do
in research and to talk with our theaters and pds,
participan dinners and everybody in the ecosystem.
Speaker 2 (18:13):
I mean, it's it's early days, right, It's only been
several days since the debut of course of these ets,
and man have prices gone through the roof, I think,
and I mean we'll see it. Nothing goes up in
the straight line too.
Speaker 4 (18:24):
Oh you mean the domestic one, the domestic one. Yeah,
the domestic one is one the Minha and China domestic
one is through the cross listing scheme. We have two
partners in Minan, China, one in Shanghai, Wan and shin
Zin to list a feather fund. Each feeder funds to
fit to our Hong Kong Saudi ETF. Yeah, it's much
(18:48):
much easier for all Chinese partners to invest into Saudi.
Otherwise they were facing like working on Sunday and other things.
Speaker 2 (18:58):
Yeah.
Speaker 3 (18:59):
So in terms of this China, Shanghai, shen Chien, Saudi
Arabia connect for ETFs, when do you expect that this
will happen? Because now we're in the first few steps.
Products have been listed. When do you think it'll actually
come to fruition.
Speaker 4 (19:12):
I think it's coming. You know, it's not like a
pair of when China ETF goes to Saudi one Saudi
ETF comes to China. But right now we are already
step one or version one. We bring Saudi's ETF listed
on Hong Kong and then feeder funds listed on Shanji
and Shanghai. Our next step probably will bring Hong Kong
(19:36):
or China A listed on Saudi's capital markets. UH their
exchange is called tada Wu, so probably we can bring
Hong Kong ETF or Hong Kong products min and China
products to their.
Speaker 2 (19:49):
When we mentioned afsho on sure we know what we're
talking about. Hong Kong has this mel and China. I'm wondering,
when you go out into the rest of the world
and you have to talk about quote unquote the Chinese
stock market universe, do you feel like you still have
to there is some form of education that you have
to sort of undertake the difference between Hong Kong and
(20:11):
mainland China, the index constituency that you get here, the
difference in China, and I'm wondering how it is almost
to be an ambassador of the market, if I could
describe it that way.
Speaker 4 (20:23):
So for most of sophisticated investdors, you don't need to
tell them what's the difference between Mino China and Hong
Kong issues or edh yeers. But for the rest of them,
it's a mess. You know, when you talk quite a
lot about them, they just don't know. So what is
a then why there is a There is only like
Shanghai San Engines, so something like that. We are like
(20:45):
an ambassador of all those stacks, so we need to
tell them and sometimes we also joke about that. It's
like being in this industry. We have our jobs curity
quite safe. The reason is the whole system is so complicated. Yeah, yeah,
it's not that easy. So that's why you know, Hong
(21:07):
Kong has its value. When we bring institutional investors from
a board, they are very comfortable to go to Hong
Kong first because too complicated and.
Speaker 2 (21:17):
They're more familiar with Hong Kong it has the longer
history as being a market. Just to follow up on
that as well, a bit of a background for some
of our listeners, right, I studied in Shanghai. I was
there when things were opening up in the two thousands, right,
and I knew the some of the projects to make
Shanghai an international finance center. And then of course you
have Shanjen that has the aut exchange, and then you
have Hong Kong, and then of course Beijing has now
(21:39):
then the small caps gauge there. How do you think
it's all going to work out in the future longer
longer term? You have a market in Hong Kong, you
have separate financial centers in Changa and Shinjen. Do you
think all can coexist smoothly?
Speaker 4 (21:56):
Yeah? I think obviously there's a collaboration between those major
three stack changes shanghais Engine and Hong Kong, and also
they are facing competitions. But from my point of view,
I would say, you know, Shanghai Sanden obviously get their
value of course for domestic investors one hundred percent, but
(22:18):
Hong Kong is more international platform and we have a
lot of advantage in issuing some new things like bitcoin,
like inverse, becoin etf all sorts of things. They will
be functionally different if you ask me, I certainly think
from international point of view, I think Hong Kong has
(22:40):
its very strong value on that.
Speaker 3 (22:43):
Yeah, what's one tip you can give them on what
it takes to be successful ETF issue in the region,
because Asia is just so fragmented and so different.
Speaker 4 (22:51):
To the rest of the market for the ETF usual,
I think the most important thing is you need to
have commitment. You need to be dedicate. But if you
really want to, you know, have a successful business here,
you need to really really focus, to commit to the market,
to do a lot of investor education, and to do
(23:13):
a lot of marketing, you need to spend money, et cetera.
Speaker 2 (23:17):
Yeah, and maybe this the question is really to your
point on competition, right, is there space for a new entrance?
Is the question right? Or is this a market where
the bigger takes the bulk of the market share and
the to burrier are quite high or do you consider
them low.
Speaker 4 (23:34):
I think the entry barrier is high, to be honest,
but it's not saying, you know, there's no chance for
newcomer to come in. So for CESP, we are also newcomer, right.
We just launching ETF at twenty twelve. Before that, we
have zero experience in ETF. But we work very hard
and also smartly. We embrace innovative ideas and we get
(23:59):
the data is here right now, so I think from
that point of view, all the players has chance. But
in ETF definitely, you know, first move advantage, winner takes
all those rules applied.
Speaker 3 (24:13):
Moving on, we're going to do the fun questions now
missing You're on several boards, permanent honorary chairperson of the
Chinese Asset Management Association, which you started, Vice Chairman of
the Hong Kong Financial Service Development Council, and the list
goes on and on and on. How do you do
it all?
Speaker 4 (24:32):
Try my best, really try my best, because when I
began to start my career in Hong Kong to set
up these small companies or voice was difficult to be
heard by the regulators and everything, and they will form
the first Hong k Kong Association. So it's basically raising
(24:52):
voice to let the regulators know those newcomers, especially from
Milian China. As a managers, the difficulty facing and the
challenging wele facing. So I guess because of that, you
know you need to have your words to be heard
to represent your group of people. So I'm the one
to come here the artists, so naturally.
Speaker 3 (25:14):
You're very busy. What is one advice you give your
younger self ten years ago, I.
Speaker 4 (25:20):
Think still focus, focus, work harder.
Speaker 2 (25:24):
How do you keep the culture in your company entrepreneurial
in other words, like it almost has to always have
a startup spirit because you guys are trying new things
all the time. You're launching new strategies, and the bigger
you get, the more difficult I imagine it is for
you to share that it's probably you in your head,
you know in yourself, but being able to make your
(25:48):
team feel the same way that you do about the project,
it must be difficult.
Speaker 4 (25:55):
Yes, So for us, obviously we need that spirit to
try and use it thans and to move very fast.
It's a very fast environment and it's highly competitive environment
for ETF and we're very lucky we have the team.
We share the same dream and we treat people fairly.
(26:18):
Most of the people I would say in c SOP
they're very proud to be part of that. And we
do a lot of things together and we'll achieve quite
a lot of things together and people can share with
that joy. Everybody can share with that joy as well.
Like yesterday we went to San Zen to attend the
listing of fatter funds. Synthrones like change. You can see,
(26:42):
you know, the people occupy the stage take pictures are
all coming from SOOP guys. Actually it's the China thousands listing,
but CSOP will always make it like our own ETF
for listing. So you can sense that people are so
proud of the name of SOOP and they are part
of that. And I think every one of the team
(27:05):
members they find their own appropriate position. They contribute together,
not one or two superstars, but the whole team. Yeah.
Speaker 3 (27:13):
A fun fact for our listeners is I believe if
you work at CSOP you get free lunch every day.
That's what some of your employees tell me that they
really liked.
Speaker 4 (27:22):
Yeah, so people gain quite a lot of weight as well.
Speaker 3 (27:28):
Thank you so much for your time and insights. Missing.
We really enjoyed having you on this episode of Tiger Money,
and we look forward to continuing our conversation another time.
Speaker 4 (27:38):
Thank you so much. It'smi Prajer and.
Speaker 2 (27:40):
So all our listeners out there, thank you for joining us.
Today's an absolute blessing to have you spend your time here.
If you're listening to Tiger Money, you'r Bloomberg podcast about
investing funds and financial markets in Asia and beyond. If
you like what you hear, please do not forget to
subscribe to like, and to also share with your friends
and loved ones. And until next time, you can find
us inside the Bloomberg terminal or on LinkedIn. We look
(28:01):
forward to hearing from all of you. This podcast was
produced by Clara chep
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