Hong Kong’s five funds selling in the mainland (northbound) have collectively seen gross sales pick up in March, with RMB 508m ($74m) of inflow compared to RMB 270m in February and RMB 90m in January.
The March inflow figures were likely supported by the lifting of a subscription cap on the JPMorgan Asian Total Return Bond Fund, which has dominated northbound sales, since February.
However, the northbound funds have had net outflows for five months in a row.
| Monthly net sales in RMB m | Northbound | Southbound |
| March | -10.2 | 4.7 |
| February | -181.6 | 3.6 |
| January | -286.1 | -2.4 |
| December | -410.9 | -1.3 |
| November | -300.7 | 1.7 |
| Total net sales since January 2016 | 7,294.6 ($1.1bn) | 102.2 ($14.8m) |
Source: State Administration of Foreign Exchange
Looking at southbound funds — about two dozen mainland funds selling in the SAR — there is also an increase in gross sales, with a collective inflow of RMB 16.6m in March versus RMB 7m in February and RMB 5m in Janurary.
More applicants
Despite the halt in approving more northbound funds, foreign fund houses are positive about the MRF scheme over the long run.
JP Morgan has filed applicaton for one more MRF fund, the JP Morgan Asia Equity Dividend Fund, as reported earlier.
UBS Asset Management is also introducing its first Hong Kong-domiciled mutual funds later this month, with expectations of joining the MRF scheme later.
Pictet Asset Management launched its first Hong Kong-domiciled fund in September last year, the Strategic Income Fund. It will be eligible for sale in China in one year.
Pictet hopes to address the demand for income products, which is coming from investors in Hong Kong and onshore China.
Amy Cho, Pictet’s head of APAC ex-Japan, who spoke at Fund Forum Asia 2017 in Hong Kong yesterday, noted that her firm is considering registering the fund in Taiwan after reaching a one-year track record in Hong Kong. Attracting Taiwan assets will help the firm address the MRF’s rules on AUM.
Under the MRF, the amount of assets gathered in mainland China can be no more than half of the fund’s total assets.
“We don’t think we will have problems raising money through the MRF, but assets will be capped if we don’t raise enough assets outside China. The trading would be suspended,” she said.
