New | Slow start expected for mutual fund recognition in July
The landmark scheme to allow Hong Kong and China fund managers to sell a combined 300 billion yuan of fund products to each other will kick off in a slow start in July as many technical details are still up in the air
Hong Kong's money managers are struggling with unclear rules less than a week before a landmark mutual fund recognition scheme with the mainland kicks off.
The scheme, which will allow Hong Kong and mainland fund managers to sell a combined 300 billion yuan (HK$374.5 billion) of fund products to customers on the other side of the border, was expected to start slowly next month because many technical details were still up in the air.
Some of the key concerns for Hong Kong-based managers who want to sell their funds to mainland customers surround application procedures, cross-border money transfers and how quota usage will be reported.
For instance, it is still not clear which form Hong Kong managers wanting to be deemed eligible for the scheme should use to apply to the China Securities Regulatory Commission, or how long it would take to get the approval.
Meanwhile, there is no guidelines on how Hong Kong managers could transfer money they have raised onshore to offshore to make investments. Moreover, there are no details on whether and how they should report their usage of the quota they receive to the regulators.
BEA Union Investment Management plans to launch no more than three fund products under the scheme initially, with chief executive Eleanor Wan saying: "I'm not sure whether the application process will be smooth as prospectuses of Hong Kong fund products are quite different from those on the mainland."