BOC Fund, Smartshares and Bank of China NZ sign ETF cooperation deal

Summary

BOC Fund has signed a strategic cooperation agreement with Smartshares, the asset management arm of the NZX, and Bank of China New Zealand to pursue in-depth collaboration on ETF products. An offshore ETF investing in the 'BOC SSE STAR 50 ETF' is planned to list on the New Zealand exchange by the end of this year. Zhang Yuhuan, general manager of BOC Fund's international business department, said launching the project in New Zealand alongside Smartshares, a leading local institution, was a prudent choice made after weighing bilateral relations, the local ecosystem and market demand.

Bank of China New Zealand has years of localised operations and is familiar with local regulatory rules and institutional networks, giving it efficient reach to long-term institutional capital such as pension funds. Li Jian, BOC Fund's chief investment officer (equity), said the BOC SSE STAR 50 ETF tracks the SSE STAR 50 Index, whose constituents are the 50 leading companies on the STAR Market with large market capitalisation and strong liquidity, spanning strategic emerging industries including semiconductors, biomedicine, high-end equipment and next-generation information technology. Zhang expects the cooperation to attract three main types of capital, including New Zealand pension funds and the Superannuation Fund.

The agreement is a new practice in capital market connectivity under the China-New Zealand comprehensive strategic partnership, and follows Saudi Arabia, Singapore and Brazil as another destination for Chinese index assets going global.

Commentary

The New Zealand Exchange (NZX), the world's only fully electronic stock exchange, has about NZ$15 billion in listed ETF assets, with Smartshares managing more than 90 percent of that total and dominating local passive investment. The STAR 50 ETF launched by BOC Fund and Smartshares gives New Zealand investors direct exposure to core assets on China's STAR Market, filling a gap in the local market for A-share growth stocks. For New Zealand small and medium-sized business owners, the cooperation not only deepens capital market connectivity but may also bring indirect commercial opportunities: as New Zealand long-term capital such as pension funds increases its allocation to Chinese technology companies, capital ties between the two countries will tighten, potentially driving industrial cooperation and technical exchange in semiconductors, biomedicine and high-end equipment, and creating potential space for local firms to participate in related supply chains or services trade.

The involvement of Bank of China New Zealand highlights the deep local presence of Chinese banks, and its network advantages could lower the threshold for cross-border investment, allowing more small and mid-sized institutional investors to participate. On the competitive landscape, institutions such as Australia's BetaShares are also actively expanding into Asian markets, and a first-mover advantage in STAR assets would help New Zealand consolidate its position as a South Pacific financial hub. The STAR 50 Index currently trades at a price-earnings ratio of about 40 times, above the roughly 20 times of the NZX 50 Index, but given the high growth of its constituents and the scale effects of the Chinese market, the valuation premium remains attractive to institutional investors seeking long-term returns.

If the ETF can attract sufficient liquidity and assets under management, it may prompt more Chinese asset managers to consider launching products in New Zealand, further enriching the local investment ecosystem.

Keywords: BOC Fund, Smartshares, Bank of China New Zealand, STAR 50 ETF, ETF going global, New Zealand Exchange, strategic cooperation agreement, capital market connectivity

AI illustration on MiDeer Observer

Source: China Fund News