HK and mainland regulators receive applications for 25 funds to be sold on both sides following kick-off

The landmark mutual fund recognition program between Hong Kong and the mainland has got off to a good start, drawing a total of 25 international and Chinese mainland funds in both directions.

Fourteen mainland funds have applied for sale in the SAR, while 11 international funds are headed north.

Confirmation of the applications came on Friday from Ashley Alder, chief executive officer of the Securities and Futures Commission (SFC) - Hong Kong's securities watchdog - two days after the program kicked off, marking another major step in mainland's capital account liberalization.

Eight mainland fund management groups submitted applications involving a total of 14 funds for sale in Hong Kong under the program, which allows funds domiciled in Hong Kong and on the mainland to be sold in each other's markets.

Thursday was the first day Hong Kong began accepting applications under the program, which offers a quota limit of 300 billion yuan ($48.4 billion) in each direction.

Alder was upbeat, saying it's a really good start and expects a lot more applications on the horizon.

"We do not expect a quick start for the scheme," he said, noting that the program is a brand new, long-term investment opportunity, and it would take time for the cross-border integration and investor education to be built up.

Bank of China Investment Management - a mainland joint venture between the Bank of China and BlackRock - applied to introduce two equity focused funds to local investors.

Zhang Yujun, assistant chairman of the China Securities Regulatory Commission, said on Friday six global fund houses have applied for 11 funds to be sold on the mainland. According to Zhang, the management scale of banking, trust, insurance, securities, funds and futures amounts to more than 6 billion yuan, with a record growth rate being registered.

Zhang believes that the latest initiative will spur greater global capital flows into the Hong Kong market, which would help consolidate the city's position as an international financial hub.

JP Morgan Asset Management, Invesco Hong Kong and HSBC Global Asset Management are among the first batch of global fund houses to have announced their participation in the program.

Invesco Hong Kong, partnering with its mainland joint venture Invesco Great Wall (IGW), which manages mutual funds with total assets of $11.1 billion, has submitted its application for an A-share mixed securities fund managed by IGW.

"The market is testing the water, with each fund house submitting applications for one or two funds," said Julia Leung Fung-yee, executive director of investment products division at the SFC.

Ye Haisheng, deputy director-general of the State Administration of Foreign Exchange, said fund investments under the program will be able to be denominated in renminbi or other currencies, representing a big step forward in liberalizing the mainland's capital account and a major departure from existing programs.

sophia@chinadailyhk.com

(HK Edition 07/04/2015 page7)