Saturday, 15 June 2024

OCBC's fourth ETF listing strengthens One Group's corporate strategy

5 min read

OCBC Securities and Lion Global Investors (LGI) will list OCBC Group’s fourth exchange traded fund (ETF), the Lion-OCBC Securities APAC Financials Dividend plus ETF on the Singapore Exchange (SGX) on 13 May 2024.

OCBC Securities has co-launched the highest number of ETFs among brokerages in Singapore, in response to increasing demand by investors. The assets under management (AUM) of SGX-listed ETFs almost doubled from SGD 5.49 billion ($4 billion) in 2019 to SGD 10.6 billion ($7.8 billion) in 2023.

The collaboration between OCBC’s asset management and brokerage subsidiaries reinforces OCBC’s One Group corporate strategy and it is the world’s first ETF that tracks the performance of Asia Pacific (APAC) financial services companies. This comes on the heels of three other popular ETF listings – the Lion-OCBC Securities Hang Seng TECH ETF, Lion-OCBC Securities China Leaders ETF and Lion-OCBC Securities Singapore Low Carbon ETF – that have a combined AUM of SGD 445 million ($328 million) as of 2023.

Stable dividends, strong capital gain potential

The ETF will appeal to investors looking for consistent dividend yields. APAC banks have consistently paid high dividends amounting to at least $130 billion in the last two years and have dominated other regions. Investors in this ETF will receive a minimum dividend payout of 5% per annum of the issue price for the first two years distributed on a quarterly basis.

Financial services companies and dividend-yield plays are popular among OCBC Securities customers. As at end 2023, more than a third of these customers have invested in stocks of financial services companies both in Singapore and internationally.

Besides generating stable income for investors, the ETF holds strong capital gain potential as APAC financial services companies are poised to benefit from Asia’s growth story and resilience. According to a report by the Deloitte Centre for Financial Services, global wealth is projected to exceed $500 trillion by 2024. APAC’s financial services companies are expected to benefit from the growth as the region accounts for over 40% of these funds.

The Lion-OCBC Securities APAC Financials Dividend plus ETF tracks the iEdge APAC Financials Dividend plus Index, an index that was developed by OCBC Securities, Lion Global Investors and SGX. It includes 30 of the largest and most tradable APAC financial institutions by free-float market capitalisation, with a focus on consistently high and sustainable dividend payouts. The index is rebalanced semi-annually. Investors in the ETF will therefore gain exposure to high-performing banks, insurance, and investment services companies listed in Australia, Hong Kong, Japan, Singapore, Korea, Indonesia, Malaysia, and Thailand.

Singapore’s local banks are index constituents, with other notable names including Commonwealth Bank of Australia, KB Financial Group, China Construction Bank, Sumitomo Mitsu Financial Group and Public Bank.

The initial offer period (IOP) for the Lion-OCBC Securities APAC Financials Dividend plus ETF commences today, 11 April 2024, and will end on 3 May 2024. The ETF will be listed on 13 May 2024 and is available in both Singapore dollar (SGD) and United States dollar (USD) denominations under the SGX tickers YLD and YLU respectively.

Wilson He, managing director of OCBC Securities, said: “Despite the challenges faced by Asian markets in 2023, such as high interest rates, inflation, and China's sluggish economy, this year holds promise in financial markets. To enable investors to capitalise on these prospects and tap into key investment opportunities in the region, we have introduced the Lion-OCBC Securities APAC Financials Dividend plus ETF.

He added: "We expect this ETF to be well-received because of its unique proposition– stable dividends, combined with the good growth prospects that stem from its APAC focus. Moreover, ETFs have long been popular among our customers at OCBC Securities. Income-focused investors will find this ETF particularly attractive."

This innovative ETF is the result of yet another strong collaboration between OCBC Securities and Lion Global Investors. As both are part of OCBC Group, the objective of the collaboration has always been to bring the global markets to local investors. This marks the fourth ETF that will be listed on the SGX, and it is expected to mirror the success of the previous three ETFs.

Teo Joo Wah, CEO of Lion Global Investors, said that the Lion-OCBC Securities APAC Financials Dividend plus ETF provides investors quick and easy access to a basket of high dividend yielding financial stocks in APAC.

Wah said: “We know that investors are now weighing their investment options more than ever, amid the rising inflation and changing investment landscape. The launch of this ETF is a testament of LGI’s commitment to bring innovative and cost-effective ETF solutions to meet the evolving and diverse needs of investors. Investors who want to invest in companies with low carbon footprint can invest in our Lion-OCBC Securities Singapore Low Carbon ETF while our Lion-OCBC Securities Hang Seng TECH ETF provides investors exposure to Chinese technology growth stocks. The Lion-OCBC Securities APAC financials dividend plus ETF is a good building block for yield seeking investors and is an important addition to LGI’s shelf of ETF products.”

Investors can subscribe to the ETF during the initial offer period through the participating dealers – OCBC Securities, FSMOne Singapore, Phillip Securities, Tiger Brokers Singapore and Maybank Securities.

OCBC customers can also invest in the ETF through OCBC ATMs, mobile and online banking by 2 May 2024, at 12 pm. The minimum subscription quantity is set at 2,000 units and there is no application fee. Each unit of ETF will be at the issue price of SGD 1.00 ($0.74). Once the ETF has been listed on SGX on 13 May 2024, investors will be able to trade via their brokers and trading platforms.

Re-disseminated by The Asian Banker

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