| June 14
June 14 China's securities regulator has
tightened registration rules for Hong Kong-focused mutual funds,
requiring equity funds with "Hong Kong" in their names to invest
at least 80 percent of their non-cash assets in the Chinese
The guidelines came after complaints by investors earlier
this year that some funds with "Hong Kong" in their product
names actually had little exposure to the stocks there.
In a document obtained by Reuters on Wednesday, the
guidelines also require fund managers with substantial Hong Kong
experience to manage the Hong Kong-labelled products.
The guidelines, which the China Securities Regulatory
Commission issued to domestic fund houses, could accelerate
mainland money flows into Hong Kong as fund houses rush to
launch funds that invest in one of the world's best-performing
markets so far this year.
Li Kai, vice head of product development at First Seafront
Fund Management Co, which received the guidelines, said that
although the rules apply to new funds, regulators may also ask
existing funds to renew their registration and meet new asset
Currently, over 100 mutual funds in China have "Hong Kong"
in their names. China's institutional and retail investors can
now invest in Hong Kong stocks via the cross-border Stock
The new schemes have channelled steady inflows of mainland
money, which helped push Hong Kong's benchmark Hang Seng Index
to the highest level in nearly two years.
The guidelines also require that Hong Kong-focused funds
have at least two employees, one of whom has to be a fund
manger, who have at least two years of investment management
experience in Hong Kong.
Under the new rules, Chinese mutual funds without "Hong
Kong" in their names must not invest over 50 percent of their
equity assets in Hong Kong stocks, the documents showed.
(Reporting by Samuel Shen in Shanghai and Lee Chyen Yee in
Singapore; Editing by Mark Potter)