Chinese funds are more eager to sell their products in Hong Kong than their counterparts in the former British colony on the first day of the implementation of the mutual fund recognition scheme between the two territories.
According to the South China Morning Post (paywall), 14 Chinese funds wanted to sell their products in the former British colony, while only 11 from Hong Kong have applied to sell in the mainland when the program began on July 1.
Nevertheless, Securities and Futures Commission CEO Ashley Alder was reportedly upbeat about the way things worked on its first day of implementation.
“It was a good start as Thursday was only the first day we started to accept applications. We expect there will be a lot more application to come,” the SCMP quoted Alder as saying at a fund forum at the SFC in Hong Kong.
Hong Kong only started processing the applications on July 2, Thursday, because it was a public holiday on July 1 and offices were closed.
The scheme allows 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 billion 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.
Hong Kong banks earlier expressed caution in their initial approach to the program, as some of them wanted to test the market first before going full blast.
But the program is not just intended for Hong Kong, according to an SFC official, since China intends to use this initiative to unite and develop the Asian mutual fund industry. Thus, it is possible that China will ink similar agreements with other countries in the region.
“Our goal now is to work together with the Mainland to implement the scheme in a manner which will serve as a foundation for promoting the development and integration of the Asian asset management industry. In short, the door does not just lead you to the Mainland,” said Julia Leung, executive director for investments products at SFC, Hong Kong’s securities watchdog.
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