Angela BAI Participated at the UNCTAD World Investment Forum

There are many opportunities for sustainable investment in emerging markets. However, due to the lack of investment products and relatively high investment risks, emerging market economies are often difficult to attract investments, especially through the methods of capital markets and private equity. The World Investment Forum held the case sharing with the aim at showing the practical experience of emerging market investors and other stakeholders. The forum invited the selected investors of international institutes and industry associations to introduce investment products and ideas for emerging markets, and provided experience to stakeholders who have interest in investing in sustainable markets of the developing economies.

On Friday, October 22, Angela BAI, Secretary General of CASVI,   shared at the UNCTAD World Investment Forum on the topic of "Sustainable Investment Cases in Emerging Markets." During the conference, Angela used the SD-100 ETF (Sustainable Development 100ETF), co-released by CASVI and Bosera Asset, as an example of the sustainable investment practice in the Chinese market. The meeting was chaired by OUYANG Yongfu , Head of the UNCTAD. Rahul Agarwal, Head of the Institutional Investment of Invest India, Caroline Le Meaux, Chief of Amundi ESG Research, Noelle Tan, senior customer expert of PG LIFE Influence Committee, and Glen yelton, Chief of Customer Strategy of ESG in North America, participated in the meeting. During the meeting, they shared the classic cases about sustainable investment in the developing regions.

Angela BAI, Secretary General of CASVI, shared a case entitled "Market Performance and SDG Influence of SD-100 ETF of CSI 300 Index" at the meeting. As the first public welfare platform to promote sustainable development finance in China, CASVI hopes to promote capital flow for supporting SDG through the issuance of this ETF. The index takes the constituent stocks of CSI 300 Index as the data pool. Through the screening of 17 indicators in 6 aspects, the list eliminated the listed companies that do not meet the qualification. The left companies will be scored by 57 sub indicators in the three major aspects: target driving force, mode innovation ,and benefit transformation. The index is eventually compiled by 100 listed companies with high comprehensive value in Economy (E), Society (S), Environment (E) and Governance (G) , aiming to find the chronical sustainable high-quality investment targets for investors.

Picture 1：The developing progress of SD-100 ETF

In the preparatory process, CASVI joined with multi-players to promote the launch of the fund, including Bosera Asset, Chinese Stock Index, Shanghai Stock Exchange. In January 2020, the ETF was successfully launched with an IPO of RMB 1.47 billion, about US $200 million. There are 18 institutional investors, including 7 banks (36%), 6 Insurance companies (38%), 2 funds (23%) and 1 NGO foundation. The solicited institutional investors are all over New York, Amsterdam, Hong Kong, Macao, Beijing, Shanghai and other major financial centers.

Picture 2: CASVI collaborating with multi-players to promote the launch of the fund

In terms of market performance, SD-100 ETF outperformed the main macro indexes. As of October 2021, ETF rose by 142.18%, with an annual yield of 13.15%, 13.83% points higher than CSI 300 Index. 100 component companies did not have negative ESG events either. However, the only fly in the ointment is that despite the outstanding performance of ETF in financial and non-financial aspects, the fund scale has shrunk to about 180 million yuan.   

According to this case, building a good partnership is one of the key points to promote the sustainable investment in emerging markets. With the participation of more institutional investors from top funds, insurance companies and banks, the performance of equity, fixed income, credit and other investment projects financed by the SDG theme is better than that of non-ESG investment in 12 months.   

Yet, through this case, Angela also expressed that promoting sustainable investment in China still faces many challenges. Investors change frequently. They still have to work for KPIs (Key Performance Indicators) despite having a fond of the SDGs. Therefore, unless sustainable investment attracts more and more investors, investors may gradually continue to return to the money game. Sustainable investment in financial products requires anchoring investors and inviting more leading funds or institutions to participate.

Picture 3 : International partners who help CASVI Developing Methodology and Supporting CSI-SD-100 ETF