Regulatory uncertainty 'top concern' for foreign fund managers in China

Author: Karry Lai | Published: 8 Jan 2019

China is gradually opening up its financial industry to foreign financial institutions but regulatory uncertainty remains for foreign fund managers entering China. Issues include lengthy approval processes for funds, high distribution costs and lack of adequate distribution channels.

Initiatives such as the Stock and Bond Connects and the Mutual Recognition of Funds (MRF) have helped, say panellists at the Hong Kong Investment Funds Association’s 12th Annual Conference. The MRF aims to streamline the procedures for Hong Kong and Chinese domiciled funds to be distributed in each other’s markets. Launched in December 2015, the scheme allows northbound funds domiciled in Hong Kong to be eligible for distribution in China. However, challenges remain for this scheme.

Christine Lin, partner, financial services at EY noted that one important limitation is the 50-50 rule that limits the sales of MRF products to Chinese investors of 50% rule of value of a fund’s...