Chinese banks' large-scale outsourcing of fixed income investments could stretch domestic fund houses' capabilities for managing risk and increase the possibility of a blowup.
Struggling to provide steep returns on their wealth management products, Chinese banks are allocating to higher-risk bond funds, driving a fast rise in mainland managers' institutional AUM.
Shanghai has drafted eagerly awaited changes to its qualified domestic limited partnership scheme. Foreign asset managers are also hoping for clarity on Chinese mutual fund licences.
With Sino-US tensions mounting over Donald Trump's plans for trade protectionism, among other things, mainland institutions are seen to be eyeing foreign assets outside America.
The fund house is the first foreign firm to win approval to manufacture private funds for onshore institutional and high-net-worth clients. And further licences are in the pipeline.
The Hong Kong watchdog's investment products head pointed to the imbalance of fund flows under the mutual recognition scheme. She also commented on the SFC's fee-disclosure proposals.