Harvest CSI 300 ESG Leaders Index ETF to list in Hong Kong, leveraging proprietarily developed ESG framework, the first among Chinese asset managers

Harvest Global Investments Co., Ltd.
2021-03-03 16:00 1777


HONG KONG, March 3, 2021 /PRNewswire/ -- Harvest Global Investments Co., Ltd. announced today the listing of Harvest CSI 300 ESG Leaders Index ETF (Stock code: 83108 RMB counter;  03108 HKD counter) on the Main Board of the Stock Exchange of Hong Kong Ltd. ("SEHK") on March 10, 2021. The ETF provides investors exposure to Top 100 high quality listed Chinese companies identified by Harvest's proprietary ESG research framework.

2020 proved to be a milestone for the rapid rise of ESG investing in China. COVID-19 has served as a wake-up call on sustainability issues and drives investor demand for sustainable investing. According to Bloomberg, fund flows into global ESG ETFs in 2020 totaled US$58.1 billion, exceeding the sum of capital inflows from 2012 to 2019. The record flows have testified investors'rising awareness and shifting focus on sustainable investing in the wake of the pandemic. In China, ESG investing is still nascent yet burgeoning. Transition towards quality economic growth accompanied by China's commitment to reach carbon neutral by 2060 requires Chinese enterprises'attention and actions in environmental protection, emission reduction, climate change and social responsibility, among other things. Success and failure of these initiatives would be priced into asset prices. The quality of corporate profits, not merely the face value, and corporates'competency to position themselves towards higher requirements from regulators and consumers have been becoming more indispensable to their business sustainability than ever. The ability for investors to understand ESG risks will help to identify opportunities and mitigate risks.

Harvest is committed to long-term sustainable investment and is an industry leader among Chinese asset managers in launching the first proprietarily developed ESG research framework.  The framework is designed to be globally-aligned while adapted to material ESG issues in China's onshore financial markets. By leveraging the framework, the CSI 300 Harvest ESG Leaders Index  ("Harvest ESG Leaders Index") had archived an excess return of 4.9% compared to the benchmark CSI 300 Index in the 13 months till December 31, 2020  solely based on stock screening with ESG factors. The outperformance demonstrates Harvest's localized ESG framework can better identify financial materiality and generate excess returns in China's onshore equity market than global frameworks.

Thomas Kwan, Chief Investment Officer at Harvest Global Investments, said: "The Harvest CSI 300 ESG Leaders Index leverages Harvest's proprietary ESG framework to identify ESG factors material to the China onshore market. It provides investors with a more sustainable exposure to China's A-share market while offering the potential for additional alpha."

Harvest has established one of the largest dedicated ESG research teams among asset managers in Asia. Harvest's ESG team is comprised of 10 veteran fundamental and quantitative analysts, led by Mr. Kwan. 

About Harvest Global Investments

Harvest Global Investments Co., Ltd. (hereinafter referred to as "HGI") was incorporated in Hong Kong in 2008 and has established offices in London and New York. The seasoned investment team of HGI is distinguished by its in-depth understanding of the capital markets. With its insights on Asia and China's financial markets, HGI offers comprehensive investment solutions for global investors. As of the end of 2020, HGI had assets under management totaling US$7.1 billion.

Important Information

  • The Product: Harvest CSI 300 ESG Leaders Index ETF (the"Sub-Fund") is a physical exchange traded fund which invests directly in the domestic securities markets in the People's Republic of China ("PRC") through the Manager's status as a qualified foreign investor ("QFII/RQFII") and/or through Stock Connect. The investment objective is to seek to provide investment results that, before fees and expenses, closely correspond to the performance of the CSI 300 Harvest ESG Leaders Index (the"Index"). 
  • Investment risk: The Sub-Fund's investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.  There is no assurance that the Sub-Fund will achieve its investment objective.
  • Equity market risk: The Sub-Fund's investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.
  • Risk associated with ESG investing: The use of ESG criteria in the construction of the Index may affect the Sub-Fund's investment performance and, as such, the Sub-Fund may perform differently compared to similar funds that do not use such criteria.  ESG-based exclusionary criteria used in selection methodology of the Index may result in the Index excluding certain securities when it might otherwise be advantageous for the Sub-Fund to invest in those securities.
  • Risk associated with the A-Share market in the PRC: High market volatility and potential settlement difficulties in the A-Share market may result in significant fluctuations in the prices of the securities traded on such markets.  Securities exchanges in the PRC typically have the right to suspend or limit trading in any security traded on the relevant exchange.  The government or the regulators may also implement policies that may affect the financial markets.  In the event of suspension of A-Shares or imposition of other measures by the PRC authorities affecting the dealing of A-Shares, the creation and redemption of Units may be disrupted.  All these may have a negative impact on the NAV of the Sub-Fund.
  • RMB currency risk: RMB is currently not freely convertible and is subject to exchange controls and restrictions.
  • Risks associated with investment made through the QFII/RQFII regime: The Sub-Fund may suffer substantial losses if the approval of the QFII/RQFII status is being revoked/terminated or otherwise invalidated as the Sub-Fund may be prohibited from trading of relevant securities and repatriation of the Sub-Fund's monies, or if any of the key operators or parties (including QFII/RQFII custodian/brokers) is bankrupt/in default and/or is disqualified from performing its obligations (including execution or settlement of any transaction or transfer of monies or securities).
  • Risks associated with the Stock Connect: The relevant rules and regulations on the Stock Connect are subject to change which may have potential retrospective effect. The Stock Connect is subject to quota limitations. Where a suspension in the trading through the programme is effected, the Sub-Fund's ability to invest in China A-shares or access the PRC market through the programme will be adversely affected. In such event, the Sub-Fund's ability to achieve its investment objective could be negatively affected.
  • PRC tax risk: There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of capital gains realised by the Sub-Fund on its investments in the PRC via QFII/RQFII or the Stock Connect. It should also be noted that there is a possibility of the PRC tax rules being changed and taxes being applied retrospectively.
  • Conflicts of interest risk: The constituent selection of the Index is presently being conducted jointly by the Index Provider and the ESG Scoring Team appointed by Harvest Fund Management, the parent company of the Manager. Whilst the Index Provider, which is responsible for maintaining the Index, is a separate legal entity from Harvest Fund Management and is operationally independent, any insolvency or adverse event affecting Harvest Fund Management may affect the constituent selection of the Index and as a result the operation of the Sub-Fund.  In addition, the different roles played by Harvest Fund Management as the appointor of the ESG Scoring Team and the parent company of the Manager may give rise to potential conflicts of interest.  Each of the Manager, the ESG Scoring Team and the Index Provider will, however, have regard to their respective obligations to the Sub-Fund and the Index at all times and will endeavour to ensure that any conflicts are resolved fairly.  Please refer to the Prospectus for more details.
  • Dual-counter risks: If there is a suspension of the inter-counter transfer of Units between the counters and/or any limitation on the level of services by brokers and CCASS participants, unitholders will only be able to trade their Units in one counter only, which may inhibit or delay an investor dealing. The market price of Units traded in each counter may deviate significantly. As such, investors may pay more or receive less when buying or selling Units traded in HKD on the SEHK than in respect of Units traded in RMB or other currencies and vice versa.
  • For Reference Only: You should not solely rely on this material to make any investment decision. Before investing, you should read the offering documents for further details, including the risk factors, and are advised to consult your financial adviser.

Important disclaimer

Investment involves risks, including possible loss of principal amount invested. Past performance or any prediction or forecast is not indicative of future results. Investors should read the offering documents for further details, including the risk factors, before investing. Investment returns not denominated in HKD/USD are exposed to exchange rate fluctuations. This shall not be construed as the making of any offer or invitation to anyone in any jurisdiction in which such offer is not authorized or unlawful. Although the information provided by third party was compiled from sources believed to be reliable, no liability for any error or omissions is acceptable by Harvest Global Investments Limited, its approved distributors, or its affiliates or any of its directors or employees. The information and opinions contained herein is for general reference only and may change without notice, and should not be relied upon for any investment decision. You are advised to consult your financial adviser before making any investment decision. This material is issued by Harvest Global Investments Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

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Source: Harvest Global Investments Co., Ltd.