TY - JOUR T1 - ETFs JF - ETFs and Indexing SP - 46 LP - 50 VL - 2003 IS - 1 AU - Zhu Shan Y1 - 2003/09/21 UR - http://guides.pm-research.com/content/2003/1/46.abstract N2 - Recently, the ETF has become a focus of financial innovation in China's security markets. This article discusses the conditions for and barriers to the development of ETFs in China, the strategies to solve the problems and some steps taken in that direction. Overall, an expanding group of institutional investors in China is seeking innovative financial instruments, such as ETFs, that provide more flexibility, high liquidity, low cost, and the opportunity to share in the growth of China's dynamic stock markets. In particular, with some of their risk-minimizing features, ETFs would help meet some of the professional investment demands of Qualified Foreign Institutional Investors (“QFIIs”) as they enter the Chinese market. With the launch of more index-tracking funds and a recent blitz of media coverage, Chinese investors have begun to accept indexation and to understand the objectives and trading mechanism of ETFs, thus building the foundation for their successful introduction into the Chinese marketplace. At the same time, it will be necessary to establish and modify relevant laws and regulations to overcome certain barriers to the introduction of ETFs into those markets. While there are currently no ETFs or similar products already in place, we believe that, with the continuing development of China's securities market and the deepening of market competition, ETFs are soon likely to become an important innovation for investors interested in China's burgeoning capital markets. ER -