(Reuters) – Chinese regulators have started licensing domestic funds to create new yuan-denominated exchange-traded funds (ETFs) for sale in Hong Kong, hoping to attract fresh investors to use yuan they have accumulated offshore to invest in mainland markets.
Within two weeks of announcing a 50 billion yuan ($7.9 billion) increase in the quotas for the Renminbi Qualified Institutional Investor (RQFII) program, China’s market regulator has already issued licenses for the Hong Kong subsidiaries of some domestic fund management companies to create new funds, according to sources and media reports.
A source at one fund said the CSRC had given approval to create an index-linked ETF but said that permission from the Hong Kong Securities and Futures Commission (SFC) was still pending. The source said the CSRC had not yet specified how much of the new quota the fund would receive.
The 21st Century Business Herald, a prominent financial newspaper, quoted an anonymous fund manager as naming four companies as having received approval to launch index-tracking ETFs: Harvest Fund, China AMC, E Fund Management and CSOP Asset Management.
The report said the funds would track the CSI100 index .CSI100, the CSI300 index .CSI300, the FTSE Xinhua China A50 index .FTXIN9, and the MSCI China A Index .dMICNA0000P but did not specify which fund would track which index.