Mutual Attraction: Hong Kong’s Bright Mutual Fund Future
As mainland China moves to relax controls over flows of capital across its borders, Hong Kong’s position as a gateway to the wealth of the world’s second-largest economy gives its fund management industry massive long-term potential. The city has long been an important offshore Renminbi hub. Now, landmark programs like the Mutual Recognition of Funds (MRF) scheme mean its importance in fund management is being magnified.
Against this background, BNY Mellon is examining some of the fundamental issues shaping Hong Kong’s future as a fund management center in its latest whitepaper series, A Greater Gateway. According to the second paper in the series, Mutual Attraction: Hong Kong’s Bright Mutual Fund Future, the city’s mutual fund industry looks set for sustained growth due to opportunities in mainland China and as Hong Kong-domiciled funds get broader global distribution. Key highlights include:
- Though China’s MRF scheme has not grown as quickly as initially expected, short-term issues should not mask the considerable opportunities that the China market presents to Hong Kong fund managers.
- Hong Kong is also bidding to expand the distribution of locally domiciled funds into other markets. In December 2016, Hong Kong signed a Memorandum of Understanding with Swiss authorities for a mutual recognition agreement – a sign of Hong Kong’s growing potential as a fund domicile.
- The continued development of Hong Kong’s position as a gateway to China requires a holistic approach from the authorities – including toward issues like tax rules and developing a world-class talent pool – but the signs are good that it is headed in the right direction.
- The use of Application Programming Interfaces (APIs) and integrated technology platforms will be increasingly vital to address the technological challenge of dealing with multiple parties in manufacturing, servicing and distributing cross-border fund products.
Read the full paper to explore these points in depth.