Hong Kong is in the process of updating its regulation on fund domiciliation in advance of a possible mutual recognition agreement with mainland China, according to KPMG.
The funds registered for distribution in Hong Kong are currently domiciled in Europe or in the Cayman Islands. However this could change soon according to Tom Brown, KPMG global leader for Investment Management who, reportedly, visited both jurisdictions last week and held talks with asset managers, trade bodies and regulators.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Hong Kong has asked mainland China for a mutual recognition agreement of funds domiciled in both jurisdictions. The request has, reportedly, been favourably received in Beijing, leading to the possibility of funds domiciled in Hong Kong being distributed in mainland China and vice versa.
Charles Muller, member of the global KPMG leadership team, said:"This is an extraordinary opportunity for Hong Kong to establish itself not only as a fund distribution but also a fund domiciliation centre. Obviously, if the agreement materializes, global asset managers will want to create Hong Kong domiciled funds to access Chinese customers.
"If structured in the right way, the same funds could then also be marketed in Europe to institutional investors via AIFMD. But for this to happen, Hong Kong will need to update its regulation on fund domiciliation, a process that has already started."
The talks on mutual recognition have come at a time when the Chinese Government announced new freedoms for asset managers, including the possibility to outsource certain functions.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataChinese asset managers have already started their international expansion, creating subsidiaries in Hong Kong and Ucits funds in Europe.
