A Hong Kong funds industry body is urging the Chinese authorities to allow mainland foreign exchange deposits to be invested in Hong Kong domiciled funds as a first step on the path towards the opening of the investment market to the Chinese, according to a report in the Hong Kong Standard.
“Hong Kong has been a capital formation centre for China in the past decade. Given our international investment management expertise, we will still have a key role to play for China's fund management industry,” stated Au King-lun, chairman of the Hong Kong Investment Funds Association.
“Our proposal will offer mainland individuals and enterprises alternatives to earn better returns,” he added.
The pool of foreign exchange deposits held in China is vast, and Beijing’s acceptance of the proposal would allow Hong Kong fund managers access to a reported US$147.4 billion in funds.
The association’s proposal suggests that China sets up a special share class under its qualified domestic institutional investor (QDII) scheme which enables Chinese investors to invest overseas through approved institutions.
The plan is currently being considered by the Financial Services and the Treasury Bureau.
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