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Commerz Fund Solutions to delist ETFs in Hong Kong

Hong Kong ETFs withdrawn over lack of investor interest leaving market with just one product tracking German index

Luxembourg-based Commerz Funds Solutions has applied to the Hong Kong Exchange to delist two passive products that track Germany’s DAX index, the ComStage 1 DAX Ucits ETF and DivDAX Ucits ETF, according to HKEX’s website.

The expected last trading day of the two products on HKEX will be on 14 February 2020.

The Hong Kong units of the passive products, launched in 2016, each have roughly €5m in assets.

Commerz Funds Solutions was transferred to Lyxor in May 2019 following Commerzbank’s 2018 sale of its equity market and commodities operations to Lyxor’s parent company Societe Generale.

Lyxor plans a full withdrawal from retail fund distribution in Hong Kong as FSA previously reported.

Strong headwinds

Hong Kong has 114 SFC-registered ETFs. Delistings have often been prompted where there is an overlap with existing products particularly involving China A-shares index trackers.

But the Commerz de-listings mean that only one Germany index-tracking fund will remain – the locally-domiciled iShares DAX Index ETF.

This product, which launched in 2016, has only €3.3m in assets – less than the two Commerzbank products.

According to the Hong Kong Exchange filing, the firm considered “various factors, including the low net asset value of the Hong Kong units”.

Germany’s GDP contracted by 0.1% in the second quarter this year and the central bank warned the economy may be sliding into a recession.

In Hong Kong, negative market sentiment is driven by two listed heavyweights, HSBC and Cathay Pacific, both of which had CEO resignations in August after confrontations with the Chinese authorities.

HSBC is in Beijing’s sights for providing information to the US government which helped build a case against Huawei Technologies chief financial officer, who was arrested earlier this year.

Cathay is under fire because some employees expressed sympathy with the Hong Kong protestors. Cathay was forced to ban certain crew members from flying to the mainland, and management went further, firing staff, issuing internal warnings to employees and making an apologetic public statement clarifying that the airline supports the government and police in their conflict with the protestors.

Moreover, Alibaba’s planned $15bn listing in Hong Kong has reportedly been postponed due to the SAR’s social unrest, according to a Reuters report.

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