Hong Kong and mainland regulators have set as a priority the establishment of mutual recognition of funds following the launch of the stock through-train, the Hong Kong Economic Journal reported Wednesday, citing Ceajer Chan Ka-keung, Secretary for Financial Services and the Treasury.
Regulators have started discussions about quotas and other details of the scheme, which is expected to launched in the short term, Chan said. No timetable has been set, however.
The arrangement would allow mutual funds from both sides of the border to be sold in each other’s markets.
While widening the investment choices for mainland investors, the scheme would also help to boost the development of Hong Kong’s fund management sector, according to industry players.
Chan said the launch of the Shanghai-Hong Kong Stock Connect came at the right time as quotas under the renminbi qualified foreign institutional investor scheme are running out.
Since the cross-border stock trading scheme kicked off on Monday, north-bound investment has shown strong momentum, outpacing investment coming from the mainland.
Chan said such a discrepancy is to be expected, and it is not desirable that a high level of capital would flow from the mainland and breach the daily limit right from the start.
“It is better for the market to adapt to the new measures,” Chan said, adding that the downtrend in the Hong Kong stock market since the launch of the through train came after a surge.
During a recent visit to Beijing, Hong Kong regulators sought higher quotas for the RQFII scheme. They are still awaiting approval of the request, he said.
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