Hong Kong ETFs Disappoint, Can Lackluster Performance Be Turned Around?

By Vince • May 19, 2024 2:28 pm • Comments

Hong Kong’s crypto ETFs launched to considerable fanfare earlier this year, yet the latest data indicates that the ETF offerings have experienced lackluster performance since their debut.

Inflows into the ETFs have declined by $25 million this week, in line with a steady downtrend since the start of May.

Although net flows into the crypto ETFs have declined considerably, it is unclear if the negative trend will continue, or see a reversal in the coming weeks and months.

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According to sources, some of China’s biggest financial funds are also moving to enter Hong Kong’s ETF market via subsidiaries. Could this be enough to turn around the disappointing performance?

21st Capital featured this chart highlighting the steady decline of Hong Kong ETF Net Flows:

Coin Paprika broke down the numbers:

Hong Kong’s crypto ETFs have disappointed compared to US-based ETFs, which hold $55 billion. The debut of these ETFs in Hong Kong did not meet expectations, leading to investor outflows.

Data from Bloomberg shows that six Bitcoin and Ether ETFs saw a decrease in inflow by $25 million from their initial $293 million.

George Djuric broke down the broader, global ETF outlook:

“Last week, global crypto ETPs saw $130m of inflows for the first time in 5 weeks. Grayscale saw the lowest weekly outflows since January totalling $171m.

Hong Kong ETFs, after a prior week of record inflows, saw just $19m inflows, suggesting the majority of the first week post ETF launches were seed capital. Ether ETPs saw outflows of $14m last week.”

Bitcoin Magazine reported that China’s asset management giants have applied to participate in Hong Kong’s fledgling crypto ETF market:

Securities Times reported on Monday that financial giants like Harvest Fund and Southern Fund have submitted applications via their Hong Kong arms and are awaiting regulatory approval.

The move reflects growing institutional interest despite China’s previous hostility towards Bitcoin.

Harvest Fund manages over $230 billion in total assets, while Southern Fund oversees over $280 billion.

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