KraneShares ICBCUBS S&P China 500 UCITS ETF Accum Units USD · LSE:CHIN
KraneShares ICBCUBS S&P China 500 UCITS ETF Accum Units USD — KraneShares — Investor Presentation (September 2020)
22 slides from KraneShares ICBCUBS S&P China 500 UCITS ETF Accum Units USD's investor presentation, Sep 30, 2020
Slide 1: The World's Second Largest Bond Market Is Now Open
KBND 30/Sep/2020 The World’s Second Largest Bond Market Is Now Open Overview of the KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF (ticker: KBND) info@kraneshares.com 1
Slide 2: Introduction to KraneShares
Introduction Introduction to KraneShares About KraneShares Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. The firm is focused on providing investors with strategies to capture China’s importance as an essential element of a well-designed investment portfolio. KraneShares E
Slide 3: KBND Investment Strategy and Overview
Introduction Investment Strategy: KBND KBND is benchmarked to the Bloomberg Barclays China Treasury and Policy Bank 9% Capped Index, which is designed to track the performance of China’s onshore renminbi-denominated government and government- related bond market. The Fund seeks to invest at least 80
Slide 4: KraneShares & Citigroup
KraneShares & Citigroup KraneShares has partnered with Citigroup to be the distributor for KBND and will also leverage Citibank's bond connect capabilities to trade the underlying securities in KBND. About Citi China Citi first established an office in China on May 15, 1902, in Shanghai. Today, Citi
Slide 5: Bloomberg Barclays China Bond Inclusion
Index Inclusion Bloomberg Barclays China Bond Inclusion • On January 31, 2019, Bloomberg announced that China’s RMB-denominated government and policy bank bonds would be added to the Bloomberg Barclays Global Aggregate Index. • Inclusion began in April of 2019 and will be complete by the end of 2020
Slide 6: Chinese government-related bonds being included in the Global Aggregate Index
Index Inclusion The Chinese government-related bonds being included in the Bloomberg Barclays Global Aggregate Index • 318 onshore Chinese bonds are being added to the Bloomberg Barclays Global Aggregate Index with a total market value of $27.41 trillion, average modified duration of 5.12 years, and
Slide 7: Fast pace of China government bond inclusion
Index Inclusion The fast pace of China government bond inclusion reflects the underlying investment opportunity it offers. China went from having no representation in the EM Government Bond Index to being the top issuer in only one year. In 2019, China replaced South Korea as the top issuer in the i
Slide 8: China's weight in the Global Aggregate Index
Index Inclusion When Chinese bonds are fully added into the Global Aggregate Index, China’s weight will increase to over 6% of the Index, and the Chinese RMB will become the fourth-largest currency component.1 Full inclusion is likely to bring at least $150 billion of fund inflows2 into China’s $15
Slide 9: A Brief History of China's Bond Market
History A Brief History of China’s Bond Market The history of China’s bond market goes back to the 19th century. However, it was not until 1951 that the Chinese developed a market for debt that resembled modern bond markets. 2020 – Leading the world in environmentally conscious business 1988 – A sec
Slide 10: Sovereign yield curves comparison
Investment Opportunity Yields on China’s government bonds are higher than most developed world government debt. Sovereign Curves 5 4 3 Yield to Maturity (%) 2 1 0 -1 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 15Y 20Y 25Y 30Y Tenor China Japan USA Germany UK Data from Bloomberg as of 30/Sep/2020. Curves are
Slide 11: 10-Year Real Yield To Worst
Investment Opportunity In real terms, yields on China’s government bonds are also attractive compared to other emerging Asian countries and China has a higher sovereign credit rating. Real Yields on Government Debt Moody’s Sovereign Country 0.5 Rating 0 China A1 10-Year Real Yield To Worst -0.5 Viet
Slide 12: Low correlations to other government bond markets
Investment Opportunity China’s government bonds exhibit low correlations to other major government bond markets. Over the past five years, China’s government bonds have exhibited a correlation of under 15% to government bonds issued by the US, Japan, and Germany. Correlation Matrix China Gov. Japan
Slide 13: Historical Evolution of CNY Dynamics
Currency Historical Evolution of CNY Dynamics & Reasons for a Stable Outlook • The RMB steadily depreciated against the dollar for much of the USD/CNY Spot Rate 1980s and 1990s, as China gained its competitive export edge. 2 • In 1997, a peg to the dollar was initiated at 8.3 CNY for every dollar an
Slide 14: CNY volatility among Asian emerging market currencies
Currency The Chinese Onshore Renminbi (CNY) had the third lowest volatility among Asian emerging market currencies in 2019. Asian Emerging Market Currencies by 2019 Volatility 12 USD Exchange Rate Standard Deviation (%) 10 8 6 4 2 0 Pakistani Rupee Korean Won Indonesian Indian Rupee Thai Baht Philip
Slide 15: Government Bond Risk/Return
Risk/Return Investors are well compensated for investing in China’s government bonds compared to those issued by many highly indebted European governments. • Moody’s currently rates China as an A1 sovereign issuer1 thanks to its steadily maintained foreign reserves, which totaled over $3 trillion at
Slide 16: Resilience during market turmoil
Risk/Return China’s government bonds have proven resilient in times of general market turmoil and bond market stress. • The global COVID-19 pandemic in 2020 caused Government Bond Yields During Coronavirus Outbreak a selloff in equities and flight to the safety of 3.5 government bonds. 3 • Many cent
Slide 17: China's bond market weighting in broad indexes
Availability China’s bond market is the second largest in the world, yet its weighting in broad indexes is not reflective of the country’s economic importance. Top Three Bond Markets Top 10 Countries in the Bloomberg Barclays Global 50 Treasuries Index 30 42.4 25 40 20 % Weight 30 15 10 20 15 12.9 5
Slide 18: Growth in China government bond issuance
Availability Issuance in China’s government bond market has increased significantly since 2017. China Treasury & State-Backed Issuance 10 300 9 250 8 # of Government-Owned Issuers Amount Outstanding ($ Trn.) 7 200 6 5 150 4 100 3 2 50 1 0 0 2017 2018 2019 Amount Outstanding Issuers Data from Bloombe
Slide 19: KBND breakdown by issuer and maturity
Availability KBND tracks securities of various maturities issued by both the Ministry of Finance (Treasuries) as well as three key state-owned banks in China. Breakdown by Issuer Breakdown by Maturity (Years) China Development Bank 9% 10+ Export-Import 14% Bank 9% 1 to 3 Agricultural 42% 5 to 10 Dev
Slide 20: KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF fund details
KraneShares Bloomberg Barclays China Bond Fund Details Data as of 9/30/2020 Top 10 Holdings as of 9/30/2020 % Holdings are subject to change. Inclusion UCITS ETF Listed Exchanges ISE, LSE CGB 2.94 10/17/24 22.34 SEDOL BLP5299 KraneShares Bloomberg Barclays China Bond Inclusion UCITS CGB 3.17 04/19/2
Slide 21: Term Definitions
Term Definitions Yield To Maturity: The total anticipated return on a bond if the bond is held until it matures. Yield To Worst: The lowest possible return on a bond that can be received if the bond operates fully within the terms of its contract without defaulting. Modified Duration: The change in
Slide 22: Important Notes
Important Notes Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full and summary prospectus, which may be obtained by visiting www.kraneshareseu.com. Read the prospectus carefully bef