Hang Seng, HSBC may find RQFII products a challenge

Foreign banks could find it tough selling offshore yuan products based on their newly obtained investment quotas, underscoring the difficulty in differentiating products in a crowded market and attracting customers amid a continuing outflow of capital from the region, analysts say.

Global lenders, including HSBC and Hang Seng Bank, are set to issue RQFII (renminbi qualified foreign institutional investor) products in Hong Kong after becoming the first non-mainland institutions to win the licences.

HSBC said last week that it had obtained a quota of 800 million yuan (HK$1 billion) under the scheme, while Hang Seng had earlier gained 1 billion yuan.

HSBC will launch a fund to invest in the onshore bond market, while Hang Seng will issue an exchange-traded fund (ETF) tracking the mainland share market.

Market watchers say their products could find it difficult beating the already sluggish performance of some products issued by mainland competitors.

A sluggish macroeconomic environment due to concerns about the potential tapering of quantitative easing in the United States is also putting lenders under pressure to attract capital.