Curbs on foreign fund managers ease

PUBLISHED : Friday, 19 October, 2007, 12:00am
UPDATED : Friday, 19 October, 2007, 12:00am

The Securities and Futures Commission has eased restrictions on the appointment by local fund houses of overseas investment managers, in part to satisfy the needs of mainland investors who can now use the city as a conduit for exposure to the rest of the world.

The move was widely welcomed by local fund managers, who said the new rules would help Hong Kong compete against Singapore as the leading fund management centre in Asia.

The new guidelines issued yesterday relax the current restriction on fund companies to overseas investment managers only from Australia, France, Germany, Ireland, Luxembourg, Britain and the United States. Now firms can hire managers from any market as long as they are licensed by their home regulator and under on-going supervision and control.

The commission will approve these appointments on a case-by-case basis.

'The qualified domestic institutional investors scheme allows mainlanders to invest in Hong Kong SFC-authorised fund products. We must ensure there are sufficient fund choices for them,' said SFC executive director Alexa Lam.

The commission has already used this approach to approve fund managers from Japan, Belgium, the Netherlands and Singapore.

She said the new move met the needs of a globalised fund industry, noting that fund houses invested in niche markets such as eastern Europe or even Africa and needed to rely on locals' knowledge.

Fund managers believe all these measures are aimed at ensuring Hong Kong would compete with Singapore or even London or New York as an international fund management centre.

Eleanor Wan, chief executive of Allianz Global Investor Hong Kong office, said: 'This has made the life of international fund companies much easier.

'Previously, for example, we had the fund managers stationed in Hong Kong to invest for the Japan funds but there is language problem. It is always better to find some fund managers on the ground who can speak the local language to manage the portfolio there.'

Hong Kong Investment Fund Association executive director Sally Wong said: 'This is a very pragmatic approach that fully takes into account the increasingly global nature of the investment management business. It definitely reinforces Hong Kong's position as a fund management hub.'

Earlier this year, the SFC streamlined licensing procedures for hedge fund managers, including by making the local securities examination more reasonable. The government last year abolished estate duty and profit tax on offshore funds.