How have these two Hong Kong exchange-traded funds performed since their launch one month ago?

Original Title: "<上线一月，香港加密 ETF 表现如何？反映出哪些市场信号？>"

Original Source: Odaily Planet Daily

Last December 16th, two cryptocurrency exchange-traded funds (ETFs) were approved to be listed and traded on the Hong Kong Stock Exchange, marking an important step for the Hong Kong government in becoming a new center for cryptocurrency in Asia. In just a month, how have the performance of Hong Kong's cryptocurrency ETFs been?

Last year, two ETFs were launched, both of which were launched by Southern Dongying Asset Management Co., Ltd. They mainly track the prices of Bitcoin and Ethereum futures in the Chicago Mercantile Exchange (CME), so they are called futures ETFs. The codes are 3066 and 3068 respectively. On January 13th, Samsung Asset Management also launched an ETF that tracks CME Bitcoin futures on the Hong Kong Stock Exchange, with the code 03135. Therefore, there are currently three cryptocurrency futures ETFs in Hong Kong.

Odaily Star Daily observed that two ETFs from Southern Dongying had a high premium (trading price higher than net asset value) on the day of their launch, namely 6.01% (Ethereum ETF) and 4.02% (Bitcoin ETF); subsequently, due to the impact of the cryptocurrency market, the prices fell briefly and remained basically in line with the net asset value.

After the beginning of this year, the cryptocurrency market rebounded, with Bitcoin and Ethereum spot prices rising by 27.6% and 30.2%, respectively. The prices of two futures ETFs also rose, by 29.2% and 32.9%, respectively, both outperforming the spot market. (Note: when the market is bullish and the futures price is higher than the spot price, it is called a futures premium.) The trading volume of both ETFs has also increased, but neither has exceeded last year's levels: the Bitcoin futures ETF's daily trading volume was 2.1 million (December 30), with a peak of 1.822 million in 2023; the Ethereum futures ETF's daily trading volume was 1.661 million (December 20), with a peak of 990,000 in 2023.

More importantly, in the rising market, two ETFs have actually experienced discounts, with the Bitcoin Futures ETF having a maximum discount of 4.96% and the Ethereum Futures ETF having a maximum discount of 2.44%. This means that early investors may be accelerating their sales and exits. The specific trends of discounts and premiums are shown below: (red indicates discounts, green indicates premiums)

(Bitcoin ETF)

(Ethereum ETF)

Compared with other cryptocurrency ETFs, it can be found that this trend is not common: the net asset value discount rate of Grayscale Bitcoin Trust (GBTC) has decreased from 45.1% at the beginning of the year to 38.8%; the net asset value discount rate of Ethereum Trust (ETHE) has decreased from 59.3% at the beginning of the year to 51%; while two Canadian cryptocurrency ETFs (BTCC, BTCQ) have both appeared at a premium, especially BTCQ, which has risen by more than 10% at one point.

Additionally, Hong Kong's ETFs do not have strong competitiveness in the international market, despite being issued for a month, their asset size has not grown significantly. On the one hand, this is due to the poor performance of the overall cryptocurrency market, but on the other hand, it is also related to its own mechanism design.

The management fee is an important factor that directly affects investors' choices. The management fees of the two ETFs of Southern Dongying are both 2%, consistent with Grayscale, while the management fees of Canadian cryptocurrency ETF products are lower than these two, only 1%. In addition, in terms of popularity, Grayscale is a globally renowned cryptocurrency trust fund with rich experience, while 3iQ and CoinShares have also established their own brands in the cryptocurrency field. Therefore, cryptocurrency investors are more familiar with these institutions. In comparison, it is difficult for Southern Dongying to attract the attention and favor of global investors.

(A List of Other Cryptocurrency ETFs in Canada)

However, the newly launched Samsung ETF seems to have learned its lesson and proactively lowered its management fee to 0.95%. Additionally, Samsung has a greater global brand influence. From this perspective, the Samsung Bitcoin ETF may surpass Southern Fund's Dongfang ETF in terms of asset management scale. Samsung also stated that if conditions permit, it will consider launching a spot-based Bitcoin ETF in Hong Kong in the future.

Currently, the Hong Kong government is actively exploring more cryptographic practices, such as the proposal by the Hong Kong Securities and Futures Commission to approve retail trading of some "high liquidity" cryptocurrencies.

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