A new body representing Chinese fund firms in Hong Kong was established yesterday, with progress on mutual fund recognition, RQFII and a global sales framework high on its agenda.
The Chinese Asset Management Association of Hong Kong was officially unveiled at press conference at the city’s Island Shangri-La Hotel. Ostensibly it has been set up to facilitate communication between industry participants and regulators in the two jurisdictions.
Already it counts as members 53 Hong Kong subsidiaries of Chinese fund firms, including ChinaAMC, Southern Fund Management and E Fund. Newcomers that have yet to launch product in Hong Kong, such as Bocom Schroders and Fortune SG Fund Management, have also signed up.
Its chairwoman is Ding Chen, who is chief executive officer of CSOP Asset Management. “We intend to become the representative for China fund managers based in Hong Kong,” she said.
The timing of its launch is quite significant, given that the proposed cross-border mutual fund recognition scheme has now progressed to its second phase, with regulators on both sides at the stage of determining product criteria. However, quite how much influence it will have is unclear.
Ding confirms that the mutual recognition programme as well as the renminbi-denominated qualified foreign institutional investor (RQFII) scheme is at the heart of its agenda.
“We want to communicate with the regulators on the formulation of mutual fund recognition policy,” she states. “This [policy] will influence whether Hong Kong can become the international asset management centre [it wants to be].”
She notes that the association is in favour of “simple and easy criteria” for determining which funds should be included, with investor protection of paramount importance.
On the question of RQFII, Ding is positive that the programme will continue to develop, having this year already been extended to Taiwan, Singapore and London. But she believes there is still plenty of educational and promotional work to do.
“We hear the term RMB very often, but many investors do not understand what RMB investment products are,” she says. “We hope our association can galvanise Chinese asset management companies in Hong Kong to foster the long-term development of RQFII.”
At the same time, one of the association’s missions will be to familiarise its members with overseas markets, providing advice on how to sell funds in international fund centres such as London and Luxembourg. It aims to provide consultancy and training on global practices.
However, Ding was at pains to deny that the association had submitted a report to the China Securities Regulatory Commission (CSRC) asking it to slow down expansion of the RQFII programme to London and Singapore, as reported. “We are not against competition,” she argued. “Competition can lead to more products in the marketplace.”
It has been five years since the first batch of Chinese fund houses set up in Hong Kong. To begin with most subsidiares managed overseas investment via the country’s qualified domestic institutional investor (QDII) programme.
However, once the RQFII scheme was introduced in 2011, they began to engage in mutual fund business by offering Rmb-denominated bond funds and ETFs investing directly into mainland China. As at the end of August Rmb127.8 billion ($20.8 billion) had been granted to 39 RQFII holders.
The number of mainland Chinese houses managing funds authorised by Hong Kong's Securities and Futures Commission (SFC) has near-doubled since the end of last year to 25, from 13 previously.
The number of SFC-authorised funds they manage has increased 52% year-on-year to 161. The net asset value of these funds jumped 160% to $135.7 billion, from $52.3 billion, by SFC data.