Industry players want Qianhai trade zone firms to invest in Hong Kong

Industry proposal urges allowing companies in special economic area that is testing free capital convertibility to invest in HK securities

PUBLISHED : Thursday, 11 July, 2013, 12:00am
UPDATED : Thursday, 11 July, 2013, 4:18am

Some Hong Kong financial industry players want Beijing to allow Chinese firms setting up in Qianhai to invest in Hong Kong markets, to encourage cross-border securities trade.

Deutsche Bank's chief economist for greater China, Ma Jun, said the mainland could consider a QDII3 (qualified domestic institutional investors) scheme to allow trading from the special economic zone.

The mainland has capital controls, so mainlanders can invest overseas only through the QDII scheme, launched about 10 years ago. Under QDII, mainlanders can buy fund products designed by mainland banks and fund houses, which are granted quotas to invest in Hong Kong or overseas markets.

The mainland regulator last year considered introducing QDII2 to allow some mainland individual investors to trade Hong Kong securities directly.

The QDII3 scheme would allow firms set up in the special economic zone to invest a certain amount of money in Hong Kong securities or bond markets

"The QDII3 scheme would allow firms set up in the special economic zone to invest a certain amount of money in Hong Kong securities or bond markets," Ma told a seminar in Qianhai hosted by the Financial Services Development Council (FSDC) of Hong Kong, a semi-official body set up by Chief Executive Leung Chun-ying earlier this year.

Qianhai is the mainland special economic zone next to Shenzhen. The central government in June 2012 designated the zone as a testing place for free capital convertibility.

FSDC chairwoman Laura Cha Shih May-lung welcomed the proposal.

"The QDII3 is a new concept. It would be up to the mainland regulators to consider such a proposal. Any schemes that promote cross-border trading between Qianhai and Hong Kong would be worth considering," she said.

Tse Yung-hoi, chairman of BOCI-Prudential Asset Management, said the mainland was likely to first introduce QDII2 before the scheme was expanded further.

Zhang Bei, director general of the Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Co-operation Zone of Shenzhen, said that Qianhai would like to act as a gateway for mainlanders investing overseas.

Zhang said Qianhai planned to put another seven to eight parcels of land up for auction in the second half of the year as demand from companies for land in the region was strong.

Qianhai last month announced rules to prescribe how developers may bid for three public sites. Dozens of office buildings and support facilities will be built over the next few years in Qianhai.