• Lion Global Investors has collaborated with China Merchants Fund Management to list the Lion-China Merchants Emerging Asia Select Index ETF. This is the world’s first Emerging Asia ETF traded in SGD, offering investors the convenience of accessing the four fast growing markets in a single trade.
   
• The ETF tracks the iEdge Emerging Asia Select 50 Net Total Return Index, which comprises shares of the 50 largest and most tradable companies by Foreign-Ownership-Adjusted Free-Float Market Capitalisation domiciled in Emerging Asia countries (i.e. Indonesia, Malaysia, Thailand and India), and listed on the relevant stock exchanges in Emerging Asia countries or the US Exchanges.
   
• The index has delivered a 10% SGD indicative total return in the first 11 months of 2024, bringing the indicative 5-year index net total return to 33% in SGD terms and 36% in USD terms. This is in comparison to the FTSE All World Emerging Asia Pacific Net Tax Index which generated a 32% USD total return, and the broader FTSE All World Asia Pacific Index which generated 35% USD total return over the five years.
   

iEdge Emerging Asia Select 50 Net Total Return Index

The index has delivered a 10% SGD indicative total return in the first 11 months of 2024. This brings the indicative 5-year index net total return to 33% in SGD terms and 36% in USD terms. The index also maintains a low correlation to the STI, with the correlation coefficient currently averaging around 0.4, yet reaching as high as 0.8 during the highly synchronous benchmark moves in 2020. 

Over the same 5 years, the FTSE All World Emerging Asia Pacific Net Tax Index generated a 32% USD total return, while averaging 18% 90-day annualised volatility. The broader FTSE All World Asia Pacific Index generated 35% USD total return over the five years. 

Capture the growth of 50 largest and most tradable companies domiciled in Emerging Asia countries

The Lion-China Merchants Emerging Asia Select Index ETF commenced trading on Dec 11, offering market participants direct access to the 50 largest and most tradable companies by Foreign-Ownership-Adjusted Free-Float Market Capitalisation domiciled in Emerging Asia countries – namely India, Malaysia, Thailand and India –, and listed on the relevant stock exchanges in Emerging Asia countries or the US Exchanges.

Note that while the iEdge Emerging Asia Select 50 Index generated a 4% higher indicative net return, its mean 90-day annualised volatility was also one-sixth lower over the five years. The moderate outperformance in risk-adjusted returns has been driven by India outpacing the region in terms of stock performance and economic growth. India-domiciled companies currently comprise 49% of the iEdge Emerging Asia Select 50 Net Total Return Index weights. 

Listed companies from Indonesia, Malaysia and Thailand make up the balance of the iEdge Emerging Asia Select 50 Index weights. The overall index is trading a P/B ratio of 2.6x, with Financials comprising 40% of the Index. At each rebalance, stocks, sectors and countries are respectively capped at 7%, 40% and 50%. 

Overall, the Index is trading approximately 15% below the inferred 12-month Bloomberg Consensus Estimate Target Price. Indian stocks are nearly twice as close to their Target Prices compared to Indonesian stocks. Consequently, the FTSE India Index is 1 standard deviation above its 5-year average price-to-book (P/B) ratio, while the FTSE Indonesia Index is just over 1 standard deviation below its 5-year average P/B ratio. Both the FTSE Malaysia and FTSE Thailand Indices are trading around 15% below their respective Target Prices, positioning them roughly halfway between the mean and 1 standard deviation below their mean.

Why Emerging Asia?

Projected economic growth rates for the four countries in 2025 vary from 7.2% for India to 2.7% for Thailand. The 2025 economic outlooks for India, Indonesia, Malaysia, and Thailand reflect a mix of steady growth and stable inflation, driven by various domestic and external factors. These projections highlight the resilience and potential of these economies in the coming year. 

Current Central Bank policy rates also vary from 6.5% for the Reserve Bank of India to 2.25% for Bank of Thailand. By coincidence India maintains the highest inflation, which is largely driven by food prices, while Thailand maintains the lowest inflation rates. 

According to the World Bank, in their October East Asia and Pacific Update, common and distinct economic drivers include:

• India's robust economic growth is driven by strong domestic consumption and investment, technological advancements, increased FDI and trade partnerships, and ongoing infrastructure development.
• Indonesia's economic growth is driven by strong private consumption, government infrastructure investment, significant export performance in commodities, and the rapid expansion of the digital economy.
• Malaysia's economic growth is driven by its manufacturing sector (especially electronics), a robust services sector, strong trade relationships and FDI inflows, and significant investments in education and skills development.
• Thailand's economic growth is driven by its tourism industry, significant agricultural sector, vital industrial sector (including automotive and electronics), and proactive government policies supporting diversification and innovation.

More about the Lion-China Merchants Emerging Asia Select Index ETF:

Top 10 Constituents in the Index:

Key trading information on the ETF

• Counter Name: Lion-CM EM Asia S$
• Stock Code: EAA
• Bloomberg Ticker: EMASGD SP
• Base Currency: USD
• Trading Currency: SGD
• Trading Board Lot Size: 1 Unit
• Management Fee: 0.80% per annum^
• Fund Manager: Lion Global Investors Limited
• Custodian: The Hongkong and Shanghai Banking Corporation Limited

^ Up to a maximum of 0.99% per annum of the Net Asset Value of the Fund

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