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Haitong International receives first MRF nod

Northbound funds also saw positive net sales in February after three consecutive months of net outflows.

Haitong International Asset Management in Hong Kong has received approval from the China Securities Regulatory Commission (CSRC) this month to offer the Haitong Asian High Yield Bond Fund to mainland investors under the Hong Kong-China Mutual Recognition of Funds (MRF) scheme, according to the regulator’s records.

This is the firm’s first fund to be approved under the MRF scheme, a Hong Kong-based spokeswoman of the firm said, but did not comment whether the firm plans to apply for more funds under the scheme.

Haitong International AM managed HK$46bn ($5.86bn) in assets as of the end of December, according to the spokeswoman. The firm manages eight mutual funds and one ETF in Hong Kong, according to its website.

Haitong International AM is a subsidiary of Hong Kong-listed Haitong International Securities Group, the spokeswoman said. The group’s parent is Shanghai-based Haitong Securities.

Faster fund approval?

While a number of fund managers previously waited for two-to-three years to receive MRF approval from the regulator, Haitong’s go signal has become one of the quickest, having lodged the application for the product in March last year.

JP Morgan Asset Management also saw a quick response for its Global Bond Fund, which received approval in January this year after the firm lodged the fund’s application in December 2017.

Hui Miao, Singapore-based senior analyst at Cerulli Associates, believes that approval speed is very much relevant to market status, noting that Haitong has another application it submitted in March 2016 and is still waiting for approval.

“There were some approvals that took two or more years, but I think these were due to the market and currency turbulence in 2015 and 2016. It could be faster in a relatively stable market.

“The regulator may also consider the number of applications in queue. Only one fund filed an application in 2017, but 11 funds in 2018,” she added.

In total, 16 more funds are still waiting to be approved, CSRC data shows.

In total, there are around 14 funds that are sold in the mainland under the scheme. 

The fund approvals come at a time when Chinese investors are pulling out money from MRF funds, however. In 2018, Hong Kong-domiciled funds under the MRF (northbound funds) had net outflows of RMB 3.44bn ($510m), according to data from China’s State Administration of Foreign Exchange.

Money continued to go out in January, with net outflows totalling RMB 883.8m. But February saw a reversal, with net inflows of RMB 75.5m after three consecutive months of outflows.

Meanwhile, China-domiciled funds sold in Hong Kong (southbound funds) saw net inflows of RMB 96.55m in 2018.

Since the MRF programme began in 2015, northbound funds have had total net inflows of RMB 8.21bn as of the end of February, which compares with RMB 435.18m for southbound funds.

Part of the Bonhill Group.