A poor start to Hong Kong's` Dream of Joining the ETF Train
Hong Kong’s crypto ETFs have hit a rough patch, unlike the US spot ETFs, which boast $55 billion. Hong Kong’s launch in this market has been a letdown. As Bloomberg reports, six Bitcoin and Ether ETFs lost $25 million, dropping from an initial $293 million.
The excitement at the start fizzled out fast. Hopes to be a top spot for digital assets are fading. Unlike the US, with its strong hold on the crypto market, Hong Kong faces many hurdles. The shift from a $293 million inflow to a $25 million drop is stark.
What went wrong?
Many factors. from Market conditions changing to a shift in Investor interest, Regulatory challenges have all been part of the bulding blocks to HK`s ETF woes.
Le Shi, trading head at Auros,
says among others, there are two main reasons why Hong Kong’s crypto ETFs have had a cold reception. First, they’ve been outpaced by the US. Second, there’s doubt about China’s crypto stance. This has made investors wary.
Hong Kong’s smaller trade sector can’t keep up with the US. Leaders hoped crypto ETFs would boost trades and attract key players. The city wants to compete with crypto hubs like Singapore and Dubai and bring back its image as a lively financial center. Oddly, Beijing seems not to care about Hong Kong’s crypto push, even though crypto trading is banned in mainland China.
The surge in US ETFs sets a high bar for Hong Kong drawing in $12.1 billion in net inflows and holding a total of $55 billion a feat the Honkong only wish to achieve. The city’s leaders hoped to turn the tide by embracing crypto, thinking it would spark new growth.
What is the way forward for HK?
Leaders and Crypto front runners had envisioned bustling trading floors and top market makers setting up shop. But, things hit the worst possible start.
Hong Kong’s smaller market and strict rules have kept it lagging. While cities like Singapore and Dubai moved fast and grabbed crypto gains, Hong Kong has struggled to make a mark. The city’s hopes to rank with the big crypto players now seem harder to reach.
Bloomberg Intelligence ETF analyst Rebecca Sin sees some positive signs. With total assets over $250 million, there is potential for growth. Sin expects more issuers to enter the market, projecting these ETFs to reach $1 billion within two years.
Funds launched on April 30 by Harvest Global Investments and a group including HashKey Capital and Bosera Asset Management didn’t help much. These funds aren’t available to mainland Chinese investors. It’s still unclear if that will change
Meanwhile, the US moves ahead with ease, and Hong Kong faces big choices. Will it ease rules or find new ways to lure top talent? The city’s future in the crypto world hangs in the balance, as it tries to write a new chapter in its financial story. The world watches, waiting to see if Hong Kong can step up to the challenge.
