Mainland Individuals To Invest Directly In Hong Kong Securities

by Mary Swire, Tax-News.com, Hong Kong

22 August 2007

Hong Kong Financial Secretary, John Tsang and the Chief Executive of the Hong Kong Monetary Authority (HKMA), Joseph Yam, have welcomed a pilot scheme announced by the China's State Administration of Foreign Exchange (SAFE) for Mainland individuals to invest directly in securities in Hong Kong.

Under the scheme, resident individuals can use foreign currency funds of their own, or those converted from renminbi, to invest in securities listed on the Hong Kong Stock Exchange.

The Action Agenda on "China's 11th Five-Year Plan and the Development of Hong Kong", published early this year, has proposed a greater use of Hong Kong's financial platform to facilitate orderly outflows of funds from the Mainland, including granting permission for Mainland individuals to remit "self-owned" foreign currency funds out of the Mainland and make investments offshore, without going through QDII scheme. The HKMA has been in discussion with the People's Bank of China (PBoC) and SAFE on the operational details of the free-walk scheme. The pilot scheme announced by SAFE is a concrete response to the recommendation.

"The use of Hong Kong's financial platform for Mainland individuals to invest in securities offshore is a clear demonstration of the mutually-assisting, complementary and inter-active relationship between the financial systems of the Mainland and Hong Kong. It will help to enhance the status of Hong Kong as an international financial centre," Mr Tsang stated.

Mr Yam added that the pilot scheme was conducive to the interaction, and the mutual development of the financial markets in Hong Kong and the Mainland. "The HKMA will continue to work with the PBoC, SAFE and other Mainland authorities on measures to strengthen the links and interaction of the financial markets in the two places, thereby increasing their overall size and efficiency," he concluded.

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