HK fund industry welcomes new CEPA measures to facilitate cross-border fund activities
30 August 2013
News, Asia, China
By Hui Ching-hoo
The Hong Kong government signed the tenth supplement of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) on Thursday (August 29) with Mainland Minister of Commerce Gao Yan.
Under the agreement, China has agreed to study the mutual recognition of fund products between China and Hong Kong.
In addition, Hong Kong-funded securities companies will be allowed to reference securities assets being managed by respective China-based subsidiaries when applying for qualified foreign institutional investor (QFII) status.
Meanwhile, qualified Hong Kong-funded financial institutions will be allowed to set up JV fund management companies in China in accordance with relevant Mainland requirements. Financial institutions which satisfy the requirements for establishing foreign-invested securities companies will be allowed to set up a single fully licensed JV securities company in each of the following districts; Shanghai, Guangdong province and Shenzhen, in accordance with the relevant requirement. The maximum aggregate shareholding allowed for Hong Kong-funded institutions is 51%.
Timothy Tse, CEO of Value Partners, says the much-anticipated mutual recognition scheme for investment funds is considered a game changer: “Hong Kong’s fund products have a strong appeal and will likely catch the eyes of Mainland investors, a huge potential client base given the size of the China market and the high savings rate on the Mainland. As a leading value investor in the region with a strong track record in delivering superior long-term performance, Value Partners will be positioning itself in an attempt to capture opportunities in this area.”
“We warmly welcome the latest initiatives under CEPA 10,” says Mr. Tse. “This marks another step toward the liberalisation of the Mainland financial services sector. As China quickens the pace of its financial reforms, investors should be the end beneficiaries, enjoying a better offering of products and services.”
Hong Kong Investment Funds Association CEO Sally Wong applauds the fact that the tenth supplement of CEPA will generate a win-win situation for Hong Kong and Mainland fund managers.
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