Many foreign fund managers are pinning their China distribution strategies on the WFOE scheme. But the programme's limitations pose familiar problems for scaling the business.
Chinese regulators are putting up unnecessary barriers to fund managers wanting to take advantage of mutual recognition of funds between Hong Kong and the mainland, believe industry experts.
Regulators have approved a scheme to allow funds to be distributed between Hong Kong and Britain. We asked four funds experts what the prospects are for this new arrangement.
The country’s trial rules on pension products should encourage Hong Kong managers to reconsider opportunities to sell funds through the mutual recognition scheme.
But it may be some time before China inks its own cross-border funds agreement with another country.
Harvest Global Investments has qualified for the Switzerland-Hong Kong mutual recognition of funds scheme, but the hard work is to come – and it will take time.
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.
Fund executives put the territory well ahead of mainland Chinese cities and Singapore in this regard, despite certain reservations, finds a survey by BBH due for release today.
Industry participants are questioning the motivation behind and benefits of Hong Kong's new agreement with Switzerland on mutual recognition of funds.
But the US asset management giant has already ruled out using the mutual recognition of funds scheme or setting up a wholly foreign-owned entity in China.
August sales of Hong Kong funds under the mutual recognition scheme exceeded the total volume in the first seven months of the year. JP Morgan Asset Management accounts for the lion's share.
It would make little sense for China to accept Ucits funds or to merge with other Asian passport schemes, says Sean Tuffy, head of regulatory intelligence at custody bank BBH.