Hong Kong Exchanges and Clearing Limited (HKEX) today welcomed Hong Kong’s first-ever listings of Covered Call ETFs.

The two new ETFs listed today – Global X HSI Components Covered Call Active ETF (Stock code: 3419) and Global X HSCEI Components Covered Call Active ETF (Stock code: 3416), both issued by Mirae Asset Global Investments (Hong Kong) Limited, primarily invest in constituent equity securities in the Hang Seng Index and the Hang Seng China Enterprises Index respectively.

HKEX Head of Equities Product Development, Brian Roberts, said:

“The two Covered Call ETFs listing today, the first of their kind in Hong Kong, are great additions to our diverse lineup of Exchange Traded Products. The use of covered calls is an increasingly popular investment strategy as investors look to diversify beyond traditional products, navigate potentially volatile markets and hedge downside risk.”

A covered call is a strategy where an investor sells call options on an asset they already own, generating income in the form of a premium. This allows investors to benefit from potential asset appreciation up to the strike price, and during times of volatility, the options premiums can provide downside protection to investors.

Roberts added:

“This type of strategy typically requires a level of expertise and involves active trading. However, an ETF that incorporates a covered call strategy can help investors save time, generate passive income, and remove the complexity of managing downside risks on their own. We look forward to welcoming more of these and other ETFs to our markets in the coming months ahead.”

Exchange Traded Products (ETPs), including ETFs and Leveraged and Inverse Products (L&I Products), are one of the fastest-growing segments in HKEX’s markets, with sustained growth momentum and a diversifying product ecosystem. Average daily turnover in the ETP market reached an all-time high of $14 billion in 2023, up 17 per cent from a year earlier.

Last November, Hong Kong welcomed the first Saudi Arabian ETF in Asia Pacific, which was also the world’s largest Saudi ETF with over $8 billion in asset under management, or AUM. In addition, the inclusion of ETFs in Stock Connect has further boosted the continued resilience of Hong Kong’s ETP market since its introduction in July 2022, with the average daily turnover of Southbound ETFs under Stock Connect accounting for 11 per cent of Hong Kong’s ETF market in 2023.