Northbound net inflows for Hong Kong-domiciled funds available for sale in China in October ended an upward streak. Monthly net sales plunged 80.8% to RMB289m ($43.77m) from a 13-month peak in September.
It was the biggest decline in 12 months for northbound flows.
In terms of gross sales, northbound funds were down 50% month-on-month to RMB963.3m
At the end of October, total net inflows for the northbound scheme since the launch were RMB 12.49bn.
By comparison, southbound sales − mainland funds sold in Hong Kong – had a huge 321% increase month-on-month.
In terms of gross sales, China-domiciled funds in October were up to RMB80m from RMB55.9m in September.
In October, the difference in net sales between northbound and southbound funds narrowed to 35.7 times.
Since the MRF was launched in January 2016, Hong-Kong-domiciled funds have gathered far more assets from China-based investors than the China funds for sale in Hong Kong.
The northbound funds are likely benefitting from fund of funds investments, according to Cerulli Associates. However, they tend to have weak brand awareness in China.
MRF monthly net sales (RMBm)
| Northbound | Southbound | |
|
January |
-286.1 | -2.4 |
| February | -181.6 |
3.6 |
| March | -10.2 |
4.7 |
|
April |
67.4 | 8.8 |
| May | 1140.8 |
42.6 |
|
June |
928.7 | 17.7 |
| July | 313.7 |
61.5 |
|
August |
948.1 | 42.9 |
| September | 1504.4 |
12.3 |
|
October |
289.0 | 52.0 |
| Total net sales since Jan 2016 | 12,486.7 |
339.8 |
Source: State Administration of Foreign Exchange
Since the MRF launch, only nine Hong Kong-domiciled funds have been approved for sale to mainland investors by the China Securities Regulatory Commission under the MRF programme.
On the flipside, there are two dozen China-domiciled funds available for sale in the SAR.
In effort to expand the MRF to other jurisdictions, the Monetary Authority of Singapore (MAS) and the China Securities Regulatory Commission (CSRC) said they would explore an MRF scheme in a recent agreement to strengthen links between the two countries.
