Bank of China

'Yuan scheme needs some big names'

PUBLISHED : Monday, 25 June, 2012, 12:00am
UPDATED : Monday, 25 June, 2012, 12:00am

Hong Kong wants to see more big names invited to join the yuandenominated qualified foreign institutional investor scheme (RQFII), Securities and Futures Commission chairman Eddy Fong says.

The first RQFII quota, announced in December, was only offered to the 21 Hong Kong branches of mainland brokerages to enable them to market yuan-denominated fund products which invest in mainland bond and stock markets to retail investors in Hong Kong. These products met with a lukewarm response.

'Many of these firms are well known on the mainland but not in Hong Kong and that's why the first batch of RQFII fund products wasn't popular,' Fong said. 'When investors buy yuan fund products, it's natural that they want to buy from firms that they're familiar with.'

Fong said even the 'big four' state-owned banks' Hong Kong units - such as the asset management arms of Bank of China and the Industrial and Commercial Bank of China - had not yet been granted RQFII quotas.

The SFC has helped the industry lobby for the China Securities Regulatory Commission (CSRC) to approve quotas for institutions which are familiar to Hong Kong investors and have a sales network here.

Beijing only allows selected firms to invest on the mainland via the quota system. The CSRC said in April it would boost the total RQFII scheme quota from 20 billion yuan (HK$24.5 billion) to 70 billion yuan, which may be used to issue A-share exchange-traded funds in Hong Kong. Fong said some firms had applied to the SFC to launch these ETF products. ETF products track the performance of an underlying index.