ICBC Credit Suisse Asset Management Co yesterday issued an exchange-traded fund of centrally administered state-owned enterprises on anticipation of strong profitability and mergers.

The ETF, which enables investors to buy or sell shares in an entire benchmark portfolio, tracks an index constituted by 50 central SOEs listed on the Shanghai Stock Exchange.

"The 50 central SOEs are key companies that influence the country's economy, and they have recovered ahead of other companies backed by the government's 4-trillion-yuan (US$585 billion) stimulus package," said fund manager Hu Wenbiao.

"Besides, potential mergers of SOEs will generate investment chances and good returns for investors," Hu said.

The State-owned Assets Supervision and Administration Commission set next year as the deadline for mergers and restructure of central SOEs.

A total of 155 SOEs have been merged into 136 companies so far, and that number should drop to about 80 to 100 companies by next year.

The SSE State-owned Enterprises 50 Index has gained 64.2 percent so far this year.

"The timely introduction of SSE Central State-owned Enterprises ETF provides investors with an opportunity to share the income of the high quality blue chips in a more easy and transparent way," said Liu Xiaodong, vice general manager of the Shanghai bourse.

"ETFs are among the most successful products across the world as they realized large sum of net capital inflow even in the international financial crisis last year when global asset depreciated sharply," Liu said.

Only five ETFs, with a total asset of 23.2 billion yuan, had been issued on the Chinese mainland by the end of last year.

(Shanghai Daily July 21, 2009)