Bank of East Asia is being cautious in its initial step to sell funds in the mainland under the mutual recognition of funds scheme that will start on July 1, according to Reuters.
Out of the nine funds that are qualified to be sold to Chinese investors under its joint venture with Union Asset Management, BEA plans to offer only one to two, the report said, citing Eleanor Wan, chief executive officer at BEA Union.
The scheme will allow Hong Kong-domiciled funds to offer mutual fund products to investors in the mainland and vice versa. An initial investment quota of 600 billion yuan ($97 billion) – or 300 bilion yuan each for Hong Kong and China – has been set.
To qualify under the program, plain vanilla funds must have a track record of at least one year and a minimum size of 200 million or its equivalent.
The program is part of China’s bid to liberalize its capital market by allowing foreign firms to tap its vast liquidity pool.
BEA’s approach sums up the attitude of most asset managers interviewed by Reuters who are planning to enter China’s mutual fund market.
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