Change comes as carparks, retail properties sale is launched The securities watchdog made an eleventh-hour rule change last night to allow all Hong Kong fund-management firms to buy into real-estate investment trusts (reits). The sudden change, effective immediately, comes as the Housing Authority prepares to launch its reit roadshow for $25 billion worth of carparks and retail properties to be listed on the stock exchange in mid-December. It is the first of its kind in Hong Kong. Up until last night, Hong Kong funds were barred from investing in any property funds, including reits. 'In order to give market participants more flexibility, the Securities and Futures Commission has reviewed this investment restriction and concluded that with immediate effect, schemes authorised under chapter 7 of the UT Code [Code on Unit Trusts and Mutual Funds] may now invest in SFC-authorised reits, subject to an overall limit of 10 per cent of their total net asset value,' the SFC said. The change opens the door to all 100 fund-management companies with their combined $100 billion to invest. Finance services constituency legislator Chim Pui-chung said the SFC had been under pressure from government to change the rule. Proceeds from the reits would help ease the budget deficit. 'The timing of the SFC to relax the rules on reits is so close to the launch of the Housing Authority's project. It is very unusual for the commission to change the rules so quickly as it usually needs to consult the market first,' he said. 'It is possible that the SFC has come under political pressure to make the rule change rapidly. I hope the commission will apply the same flexible manner towards stockbrokers.' However, Oscar Wong Sai-hung, chief executive of BOCI-Prudential, said the change showed the commission lacked good co-ordination with the government. 'The Housing Authority announced the plan to launch the reit a year ago. The rule should have been changed long ago,' Mr Wong said. A spokesperson for the SFC said the commission had been considering changing the rule since the launch the code for reits last year. Meanwhile, Hong Kong Investment Fund Association executive director Sally Wong welcomed the SFC move. 'This relaxation is a logical development because the SFC Reits Code issued last year has ensured there is a robust framework for these products,' Ms Wong said. 'While it is difficult to gauge to what extent fund managers will immediately leverage on this relaxation, it is definitely viewed positively because reits offer an attractive risk and reward trade-off.' The Housing Authority has appointed UBS Investment Bank, Goldman Sachs (Asia) and Hongkong and Shanghai Banking Corp as joint global co-ordinators for the carparks and retail properties sale.