News

Asset managers prepare for mutual fund recognition

Mutual fundsAsia-focused asset managers are hurrying to digest information released by regulators in China and Hong Kong about plans to allow funds to be passported between both markets.

Mutual fund recognition will begin on July 1, say regulators, with an overall quota of 600 billion renminbi ($97 billion). Hong Kong fund managers will have to apply to the China Securities Regulatory Commission (CSRC) for permission to distribute their funds on the mainland while Chinese mainland managers will apply to the Securities and Futures Commission (SFC) in Hong Kong.

"Regulators from both markets deserve praise for creating this initial framework for a strong cross-border regulatory regime, and for their careful preparations to ensure a smooth implementation," says Qiumei Yang, Asia-Pacific chief executive for asset manager ICI Global.

Asset managers are optimistic about the scheme, which allows them to increase their potential distribution reach and potentially increase efficiency. However, there are challenges to overcome.

"Different legal frameworks are the major hurdles," says RBC Investor & Treasury Services in a statement. "Whilst Hong Kong and China are ostensibly a single country, both still fall under different regulators with different set of requirements."

According to Z-Ben Advisors, a consultancy based in Shanghai, the regulatory imbalance will be to the advantage of mainland fund managers, which, it predicts, will have an easier time obtaining Hong Kong distribution than Hong Kong firms will on the mainland.

The consultancy also predicts that the quality of relationships at mainland Chinese joint-venture companies will be tested.

"A very great many questions remain to be answered about [mutual recognition]'s operational details," says the firm, in a statement. "In our opinion, many fund management companies will be forced to hit-and-hope if they intend to have funds available for sale on the programme's launch date."

©2015 funds global asia

Industry comments

Investing in tomorrow’s world

investmentAt times like these, HSBC Asset Management easily pivots towards emerging markets.

The spotlight on growth markets and the need to be nimble and dynamic is ever-sharper, given the difficulty in predicting monetary policy in the world’s major nations.

Sponsored feature: Navigating the complexities of FX execution and currency risk

A comprehensive, cost-effective, and transparent currency overlay hedging solution is crucial to mitigate FX exposure risks in the complex landscapes of Japan and China's FX markets, explains Hans Jacob Feder, PhD, global head of FX services at MUFG Investor Services.

Opinion

Transitioning to an era of scarcity

The world is transitioning from an era of commodity abundance to one of undersupply. Ben Ross and Tyler Rosenlicht of Cohen & Steers believe this shift may result in significant returns for commodities and resource producers over the next decade.

Asia credit: An outsized winner in the region’s energy transition?

Ross Dilkes, fixed income portfolio manager at Wellington Management, examines the opportunities and risks for bond investors presented by the region’s decarbonisation agenda.

A quiet revolution in Japan’s corporate governance

revolution, Japan, corporate governance, Shareholders, corporate, governance, standards, improvement, Tetsuro Takase, SuMi TrustShareholders in Japan no longer accept below-par corporate governance standards. Changes are taking place, but there are still areas for improvement, says Tetsuro Takase at SuMi Trust.

Why rising demand for healthcare is creating investment opportunities in China

rising demand, healthcare, investment, opportunities, China, Robert St Clair, Investment Strategy, Fullerton Fund ManagementRobert St Clair, head of investment strategy at Fullerton Fund Management, explores the reasons investors should be paying attention to the rising demand for healthcare in China.

Executive Interviews

Executive interview: PGIM CEO on where the ESG flowers should bloom

Sep 27, 2021

David Hunt, president and chief executive of PGIM, tells Romil Patel about leading a top 10 global asset manager in times where “empowering and encouraging the kind of investment decisions as...

Executive interview: Nicolas Moreau’s orderly transition

Jul 12, 2021

Nicolas Moreau, CEO of HSBC Asset Management, is moving to Asia as the firm looks to connect more directly with the region’s growth story. ESG is also a key focus – including the ‘just’ carbon...

Roundtables

India: An “obvious choice for global investors”

Jun 22, 2023

Funds Europe, the sister publication of Funds Global Asia, hosted an India investment discussion with two seasoned experts and asked if India is the ‘last one standing’ from the Brics phenomenon. We also hear that for India, the inclusion of Indian bonds in a major index may not be the desired...

Roundtable: Singapore comes of age as an Asian ESG hub

Dec 01, 2021

Strong ESG credentials strengthen the case for Singapore as a leader in Asia of the post-Covid recovery. Our panel discusses the risks and opportunities.