Hong Kong’s MPF pension managers consider investing more in China’s A shares after rule change

Some 22 funds are discussing with MPF regulator about offering mainland-listed A shares after Shanghai, Shenzhen were added to list of approved markets in November

MPF schemes achieved in 2020 an annualised internal return of 4.8 per cent, matching the level in 2017

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The MPF Authority eased investment rules in November to allow pension managers to invest in stocks listed in Shenzhen and Shanghai. Photo: Shutterstock

Published: 9:30am, 22 Feb 2021Updated: 9:44am, 22 Feb 2021

More investment managers under the Mandatory Provident Fund (MPF) scheme are considering plans to invest in mainland Chinese stocks following a rule change last year, according to the regulator of Hong Kong’s retirement savings system.

Some 22 funds are discussing with the authority about including A shares, or yuan-denominated stocks, listed in Shanghai and Shenzhen in their investment portfolios, said Alice Law Shing-mui, managing director of the Mandatory Provident Fund Schemes Authority.

“After investment restrictions were relaxed, I believe more funds will invest in the A-share market,” she said at a briefing on Thursday. Funds are amending their prospectuses that previously reflected a low percentage or no exposure to onshore stocks, she added.

The move gives the scheme’s 4.46 million members an option to buy stocks listed in Shanghai and Shenzhen, two of the world’s top performing major equity markets after their 13.9 per cent and 38.7 per cent respective surge in 2020. Until the rule change in November, only an estimated 1.1 per cent of the MPF’s HK$1.1 trillion (US$141.9 billion) assets were invested in A shares, chiefly through the cross-border Stock Connect programme.

Alice Law Shing-mui, deputy chairman and managing director of Mandatory Provident Fund Schemes Authority. Photo: Nora Tam

Gain Miles Group, a Hong Kong-based wealth management consultancy, expects HK$7 billion to HK$10 billion inflows into A shares from members in 2021. The size of MPF’s Greater China equity assets stood at about HK$70 billion or 6 per cent of MPF assets at the end of January, it said.

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