China Merchants Securities drops South Korea ETF as Seoul stock volatility spills over

The Shenzhen-based brokerage’s retreat from Huatai-PineBridge semiconductor fund comes just weeks after stepping in as market maker A leading Chinese brokerage house has ended market making for the mainland’s only South Korea-focused exchange-traded fund (ETF), as Beijing steps up efforts to stabilise its capital markets and protect retail investors amid volatility in its East Asian neighbour’s stock market. Shenzhen-headquartered China Merchants Securities withdrew as a liquidity provider for the Huatai-PineBridge China-Korea Semiconductor ETF barely a month after assuming the role on June 17, according to Shanghai Stock Exchange filings. “The decision was purely commercial and did not reflect our view on market directions,” China Merchants told financial media outlet JWView on Monday, the same day it quit the ETF. The brokerage also ended market-making services – the provision of buy and sell quotes to provide liquidity – for five other Qualified Domestic Institutional Investor (QDII) products linked to Japan’s Nikkei 225 and the United States’ Nasdaq 100 indexes. QDII funds allow approved institutions to invest overseas within regulator-set limits.

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