Hong Kong’s five funds selling in the mainland (northbound) had yearly net sales 80 times more than southbound funds, the latest Mutual Recognition of Funds scheme figures revealed.
For the full year of 2016, Hong Kong funds selling in onshore China had net sales hit RMB 7.77bn ($1.1bn), versus RMB 96.3m ($14.1m) for the two-dozen mainland funds selling in the SAR, according to the data from the State Administration of Foreign Exchange.
Northbound funds — dominated by the JPMorgan Asian Total Return Bond Fund — had net outflows in November and December, possibly due to the underperformance of Asia bonds after Donald Trump was elected US president.
The JPM fund also imposed a voluntary subscription cap since late August. The firm’s spokesman did not immediately respond to a request for comment.
| Monthly net sales in RMB m | Northbound | Southbound |
| December | -410.9 | -1.3 |
| November | -300.7 | 1.7 |
| October | 94.4 | -1.0 |
| September | 561.6 | 15.1 |
| August | 3,951.4 | 15.4 |
| Total net sales since January 2016 | 7,772.4 ($1.1bn) | 96.3 ($14.1m) |
Source: State Administration of Foreign Exchange
First year MRF fund sales followed a zig zag pattern. Northbound sales gradually picked up pace after the MRF scheme was launched at the beginning of 2016, and they peaked in August, with RMB 4bn of net sales for the month, thanks to mainland investors’ diversification away from yuan-based products.
Then the trend reversed with fewer subscriptions and more redemptions.
MRF bond fund sales were down compared to overall onshore mutual funds’ net sales figures, which showed bond funds assets continued to grow in the second half of 2016.
On the southbound side, sales remain sluggish throughout the year. The best month was January, when the MRF scheme first started. Still, net sales were only about RMB 21.5m, a stark contrast to the reception of northbound products.
That also explains the muted activities by mainland fund houses to launch or promote their MRF funds in the SAR. Among the 48 funds approved by Hong Kong’s Securities and Futures Commission throughout the year, only about half of them have started sales.
The China Securities Regulatory Commission, however, so far only approved six funds in total for northbound sales and five have begun selling.
The performance of these five northbound funds in 2016, according to FE data:
