Hong Kong Crypto Hub Ambitions Stalled by Weak ETF Demand
- Hong Kong Bitcoin ETFs see muted investor interest, assets drop $25 million.
- Trading volume lags far behind US counterparts, raising hub ambitions doubts.
- Analysts cite US lead China’s crypto stance as reasons for investor caution.
Hong Kong’s initial foray into Bitcoin Exchange-Traded Funds (ETFs) has met with muted investor interest, according to a recent Bloomberg report . The total assets under management for the six ETFs launched in late April have fallen by roughly $25 million, down from an initial value of $293 million.
These figures fall short of the rosy predictions made by some Hong Kong asset managers. Prior to the launch, ChinaAMC executive Zhu Haokang anticipated that Hong Kong’s ETFs would surpass those in the U.S. in terms of initial listing size.
However, the reality proved significantly different. The total trading volume of Hong Kong’s ETFs on their first day was only 87.58 million Hong Kong dollars (roughly $12 million), a far cry from the $4.6 billion seen for US Bitcoin ETFs on their launch day. Analysts attribute this disparity to Hong Kong’s smaller financial sector and limited pool of investors compared to the U.S.
The lackluster performance of the ETFs raises questions about Hong Kong’s ambition to become a major crypto hub. Le Shi, Head of Trading at Market Making and Algorithmic trading firm Auros, believes Hong Kong’s approach has been “lukewarm.”
“Firstly, they got beaten to the punch by the US. Secondly, there’s ongoing uncertainty about China’s intentions with regards to crypto, which is causing potential investors to tread carefully, or avoid the jurisdiction altogether.”
He cites two key factors: the headstart enjoyed by the U.S. market, and the ongoing uncertainty surrounding China’s stance on cryptocurrencies, which is leading some investors to take a cautious approach.
The latest data from Farside Investors confirms the trend of outflows, with the total now reaching $29.9 million. Bitcoin ETFs alone saw an outflow of $13.2 million as on May 16th.
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