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Northbound funds see outflows in January

Hong Kong-domiciled products sold in the mainland (northbound funds) through the MRF had a month of outflows while southbound funds had inflows.

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
Source: Safe. *Figure at the end of the month

Part of the Bonhill Group.