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Taiwan launches first oil futures ETF in Greater China area

Taiwan launches first oil futures ETF in Greater China area

According to the Taiwan Stock Exchange, Yuanta Asset Management has launched the Yuanta S&P GSCI Gold ER ETF (00642U), which was listed on September 7. The product is the first ETF in the Greater China area to track crude oil prices, helping the Taiwan ETF market to reach a new milestone in its diversification.
The new product will track the S&P GSCI Crude Oil Enhanced Excess Return Index compiled by the S&P Dow Jones Indices and will closely follow oil futures contracts on the New York Mercantile Exchange, including the price movements of West Texas Intermediate crude oil futures. As such, the new fund will serve as an efficient instrument to follow crude oil prices.
Following the listing of gold futures ETF on April 15 this year, the new fund is the latest listing of a commodities futures ETF on the Taiwan Stock Exchange. The emergence of the new fund can lead to the development of a diversified market strategy.
The Taiwanese market already has experience with the development of commodities futures ETF. The appearance of products reflecting the commodities and oil markets have the advantages of transparent pricing, convenient handling and low cost, the Taiwan Stock Exchange said. The oil futures ETF will give Taiwanese investors an opportunity to invest directly in the rise and fall of oil prices, thus also leading to a diversification of investment choices. Taiwanese investors can expand their range from Taiwanese and Chinese shares to gold and energy products, diversifying their portfolio but also spreading the risk.
The TSE added that in recent years, commodities ETF have served as a channel for the investment in raw materials. According to Black Rock, the global scale of commodities ETF funds expanded from US$300 million in 2003 to US$120.5 billion in June 2015, an expansion by a factor of 400, making it the most rapidly growing type of ETF.
Since the oil futures ETF is closely linked to the price of crude oil and its trading is highly effective, it is one of the simplest instruments to respond to opportunities in the energy sector. Yuanta Asset Management, the company behind the first oil futures ETF, says that in the Asian region, only Japan and South Korea have so far issued crude oil ETF. Japan has four and South Korea one, and until the end of June this year, the size of the Japanese crude oil ETF has reached NT$31.9 billion, with the largest individual ETF reaching NT$15.4 billion. The size of Korea’s related ETF is NT$5.6 billion. Considering the present situation, as international crude prices have reached a low ebb, Taiwan’s oil futures ETF could soon turn into the best way for Taiwanese investors to become active in the energy market.
According to data collected by the TSE, the scale of the total ETF market from their introduction in late October 2014 and following the launch of the gold futures ETF in April of this year has grown remarkably, no matter whether one considers its size, volume or market share. By late August 2015, the size of the 30 ETF funds amounted to NT$186 billion, or NT$234.7 billion by late July. The average daily value that month reached NT$9.8 billion, occupying a record proportion of 10.62 percent of the total market. The launch of the oil futures ETF is expected to signal the start of a new wave of expansion likely to push the ETF business to new heights.


Updated : 2021-09-24 05:21 GMT+08:00