The nation's financial regulator said yesterday it was mulling allowing local mutual funds to buy Chinese equities and stock traded on the Hong Kong bourse by the end of the first half of this year.
"We are studying whether to relax the rules by June," Financial Supervisory Commission (FSC) Chairman Hu Sheng-cheng (
Local mutual funds are banned from investing in stocks and shares of Chinese firms traded in Hong Kong due to fears of a capital outflow. Local investors, however, bypass the regulations by investing in Hong Kong via other destinations.
The opening-up would help local funds better compete with foreign rivals in attracting local investors, the commission said.
The loosening of restrictions would allow local mutual funds to allocate no more than 0.4 percent of money to buy Chinese equities and 10 percent on Hong Kong-traded shares of Chinese firms, matching the current regulations on their offshore rivals, the FSC said.
Meanwhile, the commission was also pondering lifting the ceiling of investment in Chinese equities by offshore mutual funds to a floating cap referencing the related indices compiled by MSCI or FTSE.
An agreement on the relaxation was reached in an economic growth forum last year amid strong opposition from the Taiwan Solidarity Union.
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