China asset managers to lobby Beijing over competition in Hong Kong offshore yuan

Hong Kong-based fund managers form group to lobby Beijing in their offshore expansion

PUBLISHED : Monday, 12 August, 2013, 12:00am
UPDATED : Monday, 12 August, 2013, 4:18am

Mainland fund houses, which share a growing ambition to expand abroad, are co-operating in Hong Kong to form an industry association to lobby Beijing.

The first memorandum the new industry group sent to Beijing asked for help in winning more of the offshore yuan business in Hong Kong, amid increased competition from foreign companies.

Sources told the South China Morning Post the Chinese Asset Management Association of Hong Kong was established in the middle of last month, shortly after the China Securities Regulatory Commission, the mainland's top securities watchdog, announced it would expand the renminbi qualified foreign institutional investor (RQFII) scheme to encompass additional players, possibly asset managers from Taiwan, Singapore and Britain.

The expansion of the RQFII programme, a key part of the offshore trading business of the yuan, reflects the mainland government's intention to further open its financial services sector to foreign players.

But the move has caused concern among some mainland financial institutions.

Many Hong Kong-based mainland fund managers saw the expansion of the programme as a threat to their businesses if more foreign money managers were allowed to sell RQFII funds, said the sources, who declined to be named because they were not authorised to speak to the media.

With the launch of the Chinese Asset Management Association of Hong Kong, mainland fund managers can lobby policymakers in Beijing, said the sources.

The new industry group's aim was "to expand offshore yuan investment channels, optimise industry practice and management, and enhance the competitiveness of Chinese asset managers", the association said in an e-mailed statement.

It declined to comment on specific cases.

The association has 23 founding members, including some of the mainland's biggest fund houses, such as CSOP Asset Management, China Asset Management, E Fund Management and Haitong Asset Management.

All those firms already have offices in Hong Kong.

Ding Chen, the chief executive of CSOP, is the founding chairman of the association.

"We are still at an early stage in terms of RQFII business development in Hong Kong. If there are many new players joining in, that would divert many yuan inflows and it would be a blow to us," said one of the sources, whose company is a founding member of the association.

The China Securities Regulatory Commission said last month it would increase the quota for the qualified foreign institutional investor scheme to US$150 billion, from US$80 billion.

The QFII scheme was launched in 2002.