Opinion | Hong Kong fund houses face staffing issue in China sales push

Hong Kong-based fund houses are preparing for a game changer as regulators from both sides of the border work out the ground rules for the kind of funds to be sold on the mainland.

The planned mutual recognition scheme comes as big news for the fund industry as it means Hong Kong's players, which traditionally serve the city's seven million population, now have access to a much bigger market with a population of 1.3 billion.

But don't open the champagne yet. There are many issues to be sorted out before the scheme can be translated into a money spinner.

First, no timetable has been decided. As usual, mainland reforms will take time, but industry players are more positive this time. They have noted Beijing has moved pretty fast in the internationalisation of the yuan since 2009 and they believe the same pace may be seen in the fund reform.

But fund houses will need to change their practices. Under the scheme, only Hong Kong-domiciled funds authorised by the Securities and Futures Commission (SFC) can sold on the mainland while fund managers must be based here.

While all the 1,700 mutual funds targeted to be sold to Hong Kong retail investors are authorised by the SFC, only 300 are domiciled here. And these 300 funds are not that attractive as they are mainly Mandatory Provident Fund or exchange-traded funds.

Big names such as BlackRock and Allianz are said to be busy preparing to issue Hong Kong-domiciled funds to exploit the proposed changes.