Potential China fund passport
Mainland Chinese and Taiwanese authorities are expected to meet in the coming months to discuss Taiwan’s possible inclusion in the RMB Qualified Foreign Institutional Investors scheme. Hong Kong investment managers hope it will go one step further, connecting the dots between Taiwan getting RQFII quotas and an existing agreement between Hong Kong and Taiwan.
The Hong Kong Securities and Futures Commission (SFC) and the Taiwan Financial Supervisory Commission (FSC) in 2009 agreed to cross list ETFs between the stock exchanges of Hong Kong and Taiwan. Under the arrangement, the SFC and the FSC mutually recognise the other jurisdiction’s ETFs.
If Hong Kong-domiciled funds can be sold into China, and Hong Kong ETFs can be sold in Taiwan, perhaps a Greater China fund passport is just around the corner, they say. This would be an important first step in creating an Asian Fund Passport, which has been under discussion for many years without becoming reality.
An Asian Fund Passport would greatly reduce registration and administration for regional fund managers, who must now meet varying registration requirements and processes in the different markets across Asia Pacific. And it might be that it all starts with Hong Kong.