But it may be some time before China inks its own cross-border funds agreement with another country.
Fund passporting
Asia has three fund passport schemes in the pipeline - HK-China mutual recognition, Asean and ARFP - which promise to change the landscape of the region's funds industry.
Speculation about the imminent arrival of the cross-border funds scheme between Hong Kong and the mainland appears off the mark.
The proposed scheme will fail to live up to the hype initially because the size of the opportunity needs to be put into perspective, says Shiv Taneja of Cerulli.
An Asean version featuring Malaysia, Singapore and Thailand has been put forward. That is the third Asian passport scheme in eight months as sources see regional rivalry intensify.
It is transferring its fixed income team to Hong Kong, while building in equities. It aims to expand manufacturing, targeting offshore RMB products and cross-border mutual recognition.
The three proposed passport schemes won't remain separate for long, says regional head of business development Chris Taylor. A survey finds fragmented markets managers' top worry.
The SFC’s Alexa Lam and CSRC’s Xu Hao discuss the timing of the HK-China passport scheme, indicating the launch will follow the RQFII model and could be imminent.
.jpg&c=1&h=194&q=100&v=20255804&w=344)
Fund firms have lodged requests with the regulator on product eligibility, investment quota, distribution channels and advertising under the pending China-Hong Kong mutual recognition scheme.
The US fund giant will continue using its direct online sales model, whereby it does not pay fees to distributors. Given banks' dominance as fund channels in China, this could present an obstacle.
The number of Cayman Islands funds authorised in the city has fallen 30% this year against a rise in HK-domiciled funds. Retail structured product volumes have also dropped heavily.
Stewart Aldcroft of Citi says Ucits funds will not be allowed to participate in Hong Kong-China mutual recognition in the next few years, despite a Luxembourg lobbyist's argument to the contrary.
One-third of mainland mutual fund houses and one-fifth of private asset managers plan foreign expansion, finds a new survey. It also points to their domestic ambitions.
