Chinese and Hong Kong regulators are to announce approval of the first cross-border mutual funds as early as today, two people familiar with the matter said, after the summer stock-market rout set back the start date.
Not all funds that applied received the go-ahead, with the China Securities Regulatory Commission (CSRC) requesting more information from some, one person said.
Both the CSRC and Hong Kong’s Securities and Futures Commission (SFC) did not reply when asked for comment.
Mutual recognition opens a new channel for foreign asset management firms to tap household savings in China, where tight capital controls remain. The fund sales were supposed to have started in July, but were postponed because of the US$5 trillion equity rout, people with knowledge of the matter said in August.
“The market was unstable after July,” said Sam Chi Yung (岑智勇), a strategist at Delta Asia Securities Ltd in Hong Kong. “The Shenzhen-Hong Kong stock connect will be next.”
The approvals would come 13 months after the start of Shanghai-Hong Kong stock link gave foreign investors greater access to mainland shares and allowed more domestic investors to buy stocks outside the country.
The start of an expansion to Shenzhen may occur next year and preparations may take another two months even after a formal announcement, Hong Kong Exchanges & Clearing CEO Charles Li (李小加) said last month.
According to the Hong Kong Economic Journal, no more than five funds for each market will sell as much as 20 billion yuan (US$3.1 billion) of products on the other side. Most of the approvals were equity funds, the newspaper reported, citing unidentified people close to regulators and from the funds industry.
CIFM Asset Management (上投摩根資產管理) and Zeal Asset Management (行健資產管理) were among those that applied to the SFC in July, while Hang Seng Investment Management (恒生投資管理) submitted for registration to the CSRC.
Mutual recognition of funds enables Chinese asset-management firms to sell their products to offshore investors, while giving their foreign counterparts direct access to the Chinese market.
International managers previously tapped China’s growing personal wealth by teaming up with local companies for mutual-fund joint ventures in the country.
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