Samsung's product will debut on Friday as Hong Kong’s first exchange traded fund tracking crude oil, a firm spokesman told FSA.
The Samsung S&P GSCI Crude Oil ER Futures ETF will track the monthly performance of the West Texas Intermediate (WTI) crude oil futures contracts traded on the New York Mercantile Exchange.
The ETF will invest directly in WTI futures contracts, while no more than 20% of net asset value would be used as margin to buy the contracts, according to its prospectus. The other 80% will be invested in Hong Kong dollar-denominated products, such as bank deposits, money market funds or cash.
The return is calculated based on the change in price levels of the nearest contract, the next nearest contract and the gain or loss during the rollover period. A negative roll yield will be incurred if the futures price is higher than spot price.
The fund manager is Sunhwa Kim, who also looks after the firm's other two Hong Kong-listed futures ETFs, the KODEX HSI Futures ETF and KODEX HSI Futures RMB FX ETF, which were launched in February last year.
Rival Mirae Asset Global Investments, also based in South Korea, is planning to launch an oil-related ETF as well, according to sources. A Mirae spokeswoman declined to comment.
China fund manager CSOP is planning to launch an oil ETF, a CSOP spokesman confirmed, and, according to sources, another China-based fund manager has a similar product in the works.
Oil may be set for a recovery. The price of oil has plunged more than 60% since the middle of 2014, but slowly climbed up from the record low at almost $26 in January, to the current level of above $40.
BMO believes oil bottomed at $26, and though volatility will continue, the industry is expected to consolidate and possibly stabilise in the $40-$50 range.
Oil aside, asset managers are launching more ETFs in Hong Kong. Six ETFs have been set up in Hong Kong this year, inlcuding one by newcomer Amundi Asset Management, four from BMO Global Asset Management, and one from iShares.
Is crude oil headed for a recover in the second half?