Investors wary of new QDII prospects

Beijing's plans to let individual mainlanders invest in Hong Kong stocks has been greeted with muted enthusiasm, with experts warning investors not to get their hopes up.

The qualified domestic individual investors (QDII2) scheme will have limited impact on the Hong Kong market since it might take years to realise, and the wealthy individuals that the bourse is hoping to attract are already in the market, they say.

Wealthy mainland investors already had ways to invest across the border, either through fund products under the existing QDII quota or "grey" channels, said Howard Wang, head of Greater China at JP Morgan Asset Management.

The People's Bank of China said this month that Beijing was considering a trial scheme to let citizens take positions in overseas capital markets to boost outbound investment.

China Citic Bank International economist Liao Qun said the scheme would most likely be tested in Shanghai, Beijing and Tianjin, where high-net-worth individuals were clustered and financial institutions headquartered. Liao said the initial quota could be around 50 billion yuan (HK$61.71 billion) and might require people to have more than 500,000 yuan to invest overseas.

Individual mainlanders now can invest only through the qualified domestic institutional investors scheme (QDII). As of the end of last year, Beijing granted a total QDII quota of US$85.58 billion to 107 institutions. This year, some new products such as stock options, warrants and more exchange-traded funds that track Hong Kong stocks could be introduced on the mainland.