CHINA’S Fullgoal Asset Management (HK) Ltd. launched an exchange-traded fund (ETF) in London on Tuesday, providing European investors access to China’s onshore bond market.

    The ETF is the first issued by a Chinese asset manager on the London Stock Exchange and will also trade in Milan, Fullgoal said in a statement Tuesday. The company’s mainland parent oversees 337 billion yuan (US$51 billion) in assets.

    The ETF, which tracks FTSE China Onshore Sovereign and Policy Bank Bond 1-10 Year Index, will be domiciled within the Luxembourg jurisdiction.

    The ETF will be listed and traded in yuan, U.S. dollar and euro on the London Stock Exchange and settled directly in the Euroclear Bank.

    The ETF will give international investors more access to the world’s third-largest bond market before the debt is eventually added to global indexes, said Michael Chow, head of international business at Fullgoal Asset.

    “This ETF offers investors a new option to diversify their portfolio in a low cost, transparent, ETF structure,” said Chow. “As the yuan’s internationalization continues, the onshore bond market presents new opportunities for international market participants.”

    China is accelerating steps to open its debt market. In February, authorities removed quotas for medium-to-long-term foreign institutional investors to trade in the interbank market, and later eased rules on their currency exchange. Global funds still face restrictions such as a ban on onshore foreign exchange trading, unclear tax rules and repatriation limits.

    Foreign investors account for less than 2 percent of China’s debt market at present, much lower than its South Korea and India. (SD-Agencies)