Northbound funds sold under the Hong Kong-mainland Mutual Recognition of Funds (MRF) scheme recorded outflows of RMB 407.1m ($58.8m) in January, while southbound funds collected RMB 63.69m, according to latest records from the State Administration of Foreign Exchange (Safe).
The MRF between mainland China and Hong Kong is a scheme jointly launched by the China Securities Regulatory Commission (CSRC) and Hong Kong Securities and Futures Commission (SFC) in July 2015. Under the scheme, eligible mainland and Hong Kong funds can be distributed in each other’s markets.
The January fund flow numbers are the reverse of the typical trend in which northbound funds have had net inflows while southbound products generally have had net outflows.
For example, for the full year 2019, net sales for northbound funds sold under the MRF scheme reached RMB 7.16bn while southbound funds had net outflows of RMB 168.43m.
Faster approval
Since the programme began, 23 northbound products from 12 firms have been approved by China’s regulator.
Last month alone, the CSRC approved six funds under MRF scheme, which includes the Amundi Disruptive Opportunities Equity Classic Fund, the JP Morgan Asia Growth Fund, the Pictet Strategic Income Fund and three products from HSBC Global Asset Management.
Previously, the approval process took a longer time. Last year, the CSRC approved only five Hong Kong-domiciled products for mainland distribution under the MRF.
Looking at southbound funds, the Securities and Futures Commission has approved around 50 China-domiciled funds to be sold in Hong Kong, but only two dozen funds have been made available to investors, FSA previously reported.
Northbound fund flows
| Monthly flows in RMB | Total assets in RMB* | |
| Jan-19 | (884m) | 8.14bn |
| Feb-19 | 75.5m | 8.22bn |
| Mar-19 | 1.34bn | 9.55bn |
| Apr-19 | 976.3m | 10.53bn |
| May-19 | 969.7m | 11.50bn |
| Jun-19 | 1.45bn | 12.95bn |
| Jul-19 | 2.45bn | 15.39bn |
| Aug-19 | 466m | 15.86bn |
| Sep-19 | 803m | 16.66bn |
| Oct-19 | (111.7m) | 16.55bn |
| Nov-19 | 87.4m | 16.64bn |
| Dec-19 | (455.1m) | 16.18bn |
| Jan-20 | (407.1m) | 15.78bn |
Source: Safe. *Figure at the end of the month
Southbound fund flows
| Flows in RMB | Total assets in RMB* | |
| Jan-19 | (3.47m) | 429.16m |
| Feb-19 | 6.01m | 435.18m |
| Mar-19 | 12.14m | 447.32m |
| Apr-19 | (79.01m) | 368.32m |
| May-19 | (39.70m) | 328.62m |
| Jun-19 | (28.66m) | 299.96m |
| Jul-19 | 2.06m | 302.01m |
| Aug-19 | (20.52m) | 281.50m |
| Sep-19 | (10.57m) | 270.93m |
| Oct-19 | (4.63m) | 266.29m |
| Nov-19 | (2.09m) | 264.20m |
| Dec-19 | 970,000 | 265.17m |
| Jan-20 | 63.69m | 328.86m |
