Bloomberg Analyst Predicts Mainland Chinese Investors to Likely Overlook Hong Kong ETFs, Anticipating Assets Under Management (AUM) of Only $1 Billion.
Hong Kong has announced the introduction of its first exchange-traded funds (ETFs) that will track the performance of Bitcoin and Ethereum. However, due to strict regulations, investors from mainland China are unlikely to have access to these products. A Bloomberg analyst predicts that the Hong Kong ETFs will only attract $1 billion in assets under management (AUM) in the initial years.
An advertisement states that investors from mainland China will probably not be able to invest in the new spot bitcoin ETFs listed in Hong Kong, dampening the initial excitement surrounding these funds. This is not surprising considering China’s strict rules on cryptocurrencies, as trading and mining of digital tokens were banned in 2021.
Reports suggest that Hong Kong regulators have given the green light for these ETFs, allowing fresh investments in bitcoin. ChinaAMC, Harvest Global, and Bosera International are among the issuers offering these ETFs. Interestingly, the issuers themselves confirmed this approval, rather than the Securities and Futures Commission (SFC), the main securities regulator in Hong Kong, which has not commented on the matter.
Bloomberg analysts Eric Balchunas and Rebecca Sin have revised their projections for the potential AUM of these Bitcoin and Ethereum ETFs in Hong Kong. They have lowered the estimate from $25 billion to $1 billion for the first two years. The restriction on investors from mainland China from buying these ETFs, due to existing bans on virtual asset investments, is a significant factor in this adjustment.
Balchunas still considers the $1 billion estimate for the Hong Kong Bitcoin and Ethereum ETFs to be healthy. However, he notes that this figure is much lower than the initial speculation of $25 billion. He also mentions that reaching this new target depends on improvements in infrastructure.
Balchunas further observes that while investors from mainland China face restrictions, there are alternative investment options available. These alternatives, although less common, may come under regulatory scrutiny.
The approval of Hong Kong ETFs has been seen by Bitcoin enthusiasts as a potential driver for rising prices. Matrixport recently suggested that these funds could attract up to $25 billion from Chinese investors. However, the smaller scale of Hong Kong’s ETF market means that this new product is unlikely to have a massive impact, despite the remarkable inflows experienced by spot bitcoin ETFs in the U.S. shortly after their launch.
Hong Kong ETFs may benefit institutional investors who are limited to crypto trading through ETFs by offering extended trading hours alongside the U.S. market. However, institutional participation in bitcoin ETFs is still low, with minimal investment from fund managers, as shown in SEC filings.
Tags:
– Bitcoin
– Bitcoin ETF
– Cryptocurrency