Renminbi scheme fails to stir investors
RQFII programme for mainland exposure barely registers for HK players, survey finds
Hong Kong investors are not expected to warm to the renminbi qualified foreign institutional investors (RQFII) product as a favoured investment tool due to vague capital market regulation on the mainland, policy uncertainty from Beijing and unfamiliarity with A-share products.
About 70 per cent of investors would invest no more than 20 per cent of their liquid assets in RQFII products, said AMTD Financial Planning in a survey which polled 262 investors. About 12 per cent of them said they had never heard of RQFII.
The cool response from the mass market comes as asset managers are vying for a quota from Beijing and are busy designing bond and equity investment products to attract investors to invest onshore.
The China Securities Regulatory Commission said in November last year that it would grant an additional 200 billion yuan (HK$252 billion) of RQFII quota, a nearly threefold jump from its existing issued size.
Currently, there are two types of RQFII products in the market - bond funds and exchange-traded funds that track the A-share market. The best-performing RQFII bond fund last year returned a yield of 4.87 per cent, while the worst returned a negative 8.3 per cent.
In terms of management fees, the cheapest RQFII product requires 0.88 per cent of capital, while the most expensive one required as much as 1.15 per cent, according to Kenny Tang Sing-hing, the general manager of securities and asset management business at AMTD.
Nearly 20 per cent of the granted 706 billion yuan quota had not yet been utilised, Tang said.
Beijing in March further removed barriers to allow Hong Kong and foreign asset managers to take part in the RQFII scheme.
Meanwhile, under the new rules, RQFII funds can now invest in mainland initial public offerings, convertible bond sales, interbank bonds, options and share placements.
Tang expects more equity-focused RQFII products to come to the market despite the weak performance over the years, citing cheap valuation and over-estimated shadow banking risks.
"An equity market with 10 times price-earnings ratio and a 4 per cent average dividend payout ratio is still pretty attractive," he said.