China allows exchange traded funds of foreign stocks on home exchanges, but the ETF market is still nascent, said industry expert.

The world’ second largest economy is now permitting exchange traded funds (ETFs) comprised of Hong Kong underlying equities, according to a Wall Street Journal article published on August 20.

The listing of Hong Kong ETFs will “open the door for mainland investors to take part in Hong Kong’s equities market for the first time,” noted Li Keqiang, China’s Vice Premier during a visit to Hong Kong.

The step is inching Asia toward a more ETF-friendly marketplace, but the region remain largely “nascent,” according to Jim Wiandt, editor and publisher of the Journal of Indexes and publisher of IndexUniverse.com and the Exchange-Traded Funds Report.

Wiandt’s publications provide data on product and market developments related to index funds, ETFs, index derivatives, and the investment strategies associated with these instruments.

“There is huge growth potential in Asia for ETFs, but it hasn’t happened yet,” said Wiandt, attributing the region’s slow growth of ETF exposure to investor psychology. “Asian investors are more gamblers than investors. They prefer asset allocation, and stock trading and volatility—you’re not going to get more volatility than that in a single stock.”

Historically, the Asian markets have listed mainly U.S. and European products on their home exchange, according to Wiandt. Hong Kong’s Secretary for Financial Services and the Treasury KC Chan said on a radio program Saturday the implementation of the exchange traded funds will be subject to the approval of the Chinese securities regulator noted the Wall Street Journal article.

Prior to the Beijing’s recent addition of Hong Kong ETFs, Chan remarked that “there were technical problems associated with the ETFs have been resolved,” earlier in the year. Chan said it was his hope to see ETFs consisting of Hong Kong stocks launched by year end, according to the Wall Street Journal article.