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Hong Kong may bypass banks to sell investment funds through stock exchange and smartphones

Hong Kong Investment Funds Association chairman Graham Turl says the guild is working with regulators for permission to expand sales channels

PUBLISHED : Tuesday, 02 January, 2018, 11:45am
UPDATED : Tuesday, 02 January, 2018, 10:59pm

Investors in Hong Kong might soon be able to trade fund products through Hong Kong Exchanges and Clearing as well as their smartphones, as the Hong Kong Investment Funds Association pushes for more sales channels for retail funds, according to its chairman, Graham Turl.

“We are working closely with the Securities and Futures Commission to encourage more alternative sales channels for retail fund products in Hong Kong,” Turl said in an interview with the South China Morning Post.

At present, more than 80 per cent of fund sales in Hong Kong are conducted through banks, while the rest are sold through fund houses directly to clients. But Turl wants to see an expansion in the number of sales channels to boost fund sales, which had a strong year in 2017.

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Gross fund sales in the first eleven months of 2017 reached US$69.9 billion, bypassing the US$65.9 billion for 2016 as a whole, thanks to a strong performance by the benchmark Hang Seng Index, which rose by 36 per cent in 2017, its best showing since a 52 per cent rise in 2009.

Turl, who is also managing director and general counsel for Asia-Pacific at BlackRock, the world’s largest asset manager, believes an expansion in sales channels will boost sales further.

A spokeswoman confirmed that HKEX was working towards this goal. “HKEX will commence a phased replacement of its system for securities clearing and settlement, and plans to include within the blueprint for its new post-trade processing system capabilities that would support participants of HKSCC, its securities clearing house, in mutual fund-related trade and position handling,” she told the Post.

Millennials like to do everything with their smartphones, and the asset management industry needs to catch up with this trend
Graham Turl, chairman of Hong Kong Investment Funds Association

“Function roll-outs will depend on whether there are material business opportunities,” she added.

Turl said the HKIFA would work with the securities commission to allow investors to buy fund products through online channels such as smartphones.

“Millennials like to do everything with their smartphones, and the asset management industry needs to catch up with this trend,” he said.

Retail fund sales in Hong Kong up by a half to US$44.1 billion

Turl said that with China opening up its capital markets, there will be more fund companies looking to set up in Hong Kong and the mainland to tap Chinese investors.

In November, Beijing announced that all foreign banks and fund houses will be allowed to hold a 51 per cent stake in securities brokerages and asset management joint ventures, and that after three years this cap will be removed. Currently, they are only allowed to hold minority stakes.

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“This is a very positive move for China to show its intention to open up its asset management market. A lot of international fund companies are eyeing the opportunity to expand their business in mainland China,” said Turl.

“This would also help to encourage more international fund houses to set up in Hong Kong,” he added.

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