Hong Kong’s MPF managers lobby for access to Shanghai and Shenzhen stocks to avoid missing out on the world’s biggest bull run

Fund managers currently have only limited exposure to A shares because of regulatory restrictions

The Mandatory Provident Fund Schemes Authority says it constantly reviews the need to amend the list of approved stock exchanges as it has to take into account the fund industry’s requirements and balance it with the interests of MPF members

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The average savings for a Hong Kong individual from the MPF scheme is around HK$380,000. Photo: Jonathan Wong

Published: 7:00am, 23 Apr 2019Updated: 10:25pm, 25 Oct 2020

Fund managers have urged Hong Kong’s pension regulator to include the Shanghai and Shenzhen stock markets in its list of approved exchanges so as to allow the Mandatory Provident Fund (MPF) to invest more of its HK$813 billion (US$103.6 billion) assets in mainland-listed companies.

The MPF is a compulsory retirement scheme in Hong Kong covering 2.9 million people. An employer and an employee each contribute 5 per cent of the monthly income up to a combined HK$3,000 minimum mandatory contribution.

Employees can choose to invest their contribution in different investment fund choices. At present, only about 1 per cent of the MPF’s assets are invested in A shares due to the investment restrictions.

“As the two exchanges of Shanghai and Shenzhen are not on the [Mandatory Provident Fund Schemes Authority’s] list, fund managers cannot have meaningful exposure to A shares as they are relegated to a crowded 10 per cent miscellaneous bucket which houses a whole raft of instruments,” said Sally Wong Chi-ming, chief executive of Hong Kong Investment Funds Association (HKIFA), which represents the city’s fund management industry.

Sally Wong wants the Mandatory Provident Fund Schemes Authority to include Chinese bourses on the list of approved exchanges where the MPF can invest its assets. Photo: Dickson Lee

“We believe that A shares are poised to be a core part of a diversified portfolio. In view of the increasing commitments of the mainland authorities to further open up the capital markets that A shares are being included in more and more global indices, it is imperative to add them to the list so as to enable employees to effectively enjoy the growth opportunities provided by the second largest economy.”