Mutual fund recognition: Barings prepares for Hong Kong launch

Hong-Kong-1Baring Asset Management plans to launch a range of Hong Kong-domiciled funds to take advantage of the much

anticipated mutual fund recognition scheme between Hong Kong and China.

Mutual fund recognition would make funds domiciled in Hong Kong eligible for sale in China, although they would still have to be approved for sale by the Chinese regulators.

Gerry Ng, chief executive officer, Asia excluding Japan, at Barings, says: “The development of a local fund range … positions us to take advantage of the anticipated mutual recognition platform between Hong Kong and China and the increased demand for locally domiciled funds that we expect to follow.”

Alexa Lam, deputy chief executive officer at the Securities and Futures Commission in Hong Kong and architect of the scheme, told Funds Europe’s sister publication Funds Global Asia in February that the mutual fund recognition scheme is “going through the final administrative procedures”.

Lam’s term expired at the end of February and she was expected to retire, leading the industry to speculate that the scheme would launch before then.

She was eventually re-appointed for just one year, instead of the usual four years. Despite sporadic and vague statements that mutual fund recognition is inching closer, there has been no official announcement.

Qiumei Yang, head of Asia Pacific, ICI Global, says mutual fund recognition is a promising development that could pull together the region’s disparate markets.

However, international infrastructure providers are concerned about the wider context of the scheme between Hong Kong and China, and the profound implications it could have.

Many details are still unclear; global custodians and other international players, for example, are being inundated with enquiries.

“With this planned new fund range we look forward to continuing to expand our franchise in Asia and our commitment to the region, developing increasingly bespoke solutions in response to client demand,” Ng says.

Barings, which has more than $14.4 billion (€10.6 billion) of assets under management, €3.5 billion of which are invested in the Greater China region, has been active in China for over 220 years.

It opened its first office in Hong Kong in 1973. In 1982 it launched a mutual fund investing in the region and in 1985 one investing in China’s domestic A-share market.

HSBC has been appointed in principle as administrator, trustee, transfer agent and custodian for the range.

©2014 funds europe