Exclusive Interview With Huang Wang Ci Ming, Chief Executive Officer Of Hongkong Investment Fund Association: Mainland China'S Financial Opening Up Strategy Is Becoming Happy Problem Of Transnational Institutions.

Recently, the securities and Futures Commission announced that it had abolished restrictions on foreign capital shares of fund management companies since April 1, 2020. With the gradual opening up of the financial opening policy, multinational management giants are working hard to study the strategy of entering the Chinese market.

"The choice of open speed and open path is beyond expectation. Now the headache is the opportunity. How should we set the development strategy and how to grasp the time? We all say that this is a happy problem." Huang Wang Ci Ming, chief executive officer of Hongkong Investment Fund Association, told reporters.

The Hongkong investment fund association is a non profit making industry association representing the Hongkong fund management industry. Its aim is to promote the overall development of Hongkong's fund management industry and strive to enhance the professional level of the industry so as to reach the international level. Hongkong will be promoted as the main fund management center in Asia to maintain Hongkong's competitiveness.

The Hongkong Investment Fund Association has been playing an important role in the communication between the mainland and overseas institutions.

Wong Wong Ci Ming said: "for multinational fund management companies, if there is no development strategy for China, then it will miss a very important market. In the whole global layout strategy, developing the Chinese market is indispensable."

Foreign capital enthusiastically welcome financial opening opportunities

According to Huang Wang Ci Ming, in the past time, the multinational fund management companies in the forefront of the world have been planning strategies to participate in the mainland's capital market. This involves two aspects: one is how to serve mainland investors, including institutional and individual investors, and the other is how to help overseas investors to participate in the mainland capital market, such as A share and interbank bond market.

"So, recently, some documents, such as eleven financial opening-up and speeches of accelerated financial liberalization, are very exciting to everyone." Wong Wong Ci Ming said.

With the continuous landing of the financial opening policy in the mainland market, the most important question before the multinational Fund / Asset Management Co is what strategy should be adopted to enter the mainland market.

"Many companies are now communicating with regulators to understand the specific requirements of various models. Regulating the legal framework of traditional public fund companies has been very mature, and other channels, such as opening up foreign-funded financial management companies, is a relatively new way for them. Of course, some companies intend to choose not only one, but to participate in the mainland's information management market in different modes with the permission of resources. Wong Wong Ci Ming said.

At the same time, Wong Wong Ming also stressed that transnational capital management companies enter the mainland capital market. They carefully investigate the mainland market and regulatory environment, understand the needs of mainland investors, formulate strategies accordingly, "can not copy overseas practices, nor do they think they can succeed in the Chinese market because they have great fame in the world, otherwise they will not be convinced."

For example, mainland investors' understanding of wealth management has been misunderstood for a long time. For example, financial products are to be covered and exchanged, and there is not a solid expectation of return.

"Many investors in the mainland regard equities as equities. They think they are short sellers. This requires multinational companies to strengthen their education on investors. The most important thing is to let investors understand the functions and positioning of funds, especially their diversification and long-term investment characteristics. In addition, investors should understand that investment is risky and they need to take some responsibility." Wong Wong Ci Ming said.

However, it also pointed out that regulators have issued new regulations on information management, and have made great efforts in breaking up the problems such as rigid exchanges, channels and capital pools, and have shown great determination to solve the long-term bad habits of the market. The improvement of the regulatory environment will help the market develop more rationally and healthily. "Under this background, I think it is a good environment for foreign capital to enter the market."

With the continuous entry of foreign capital, the market is also concerned about the impact and change of foreign capital organizations will soon bring to the domestic capital market.

But Wong Wong Chi Ming believes that in the initial stage, the impact of overseas companies may not be great.

"In a new market, we need to establish sales channels, brands, word of mouth, performance and so on. This is not effective in a short time. However, from a long-term perspective, more overseas investors enter the mainland market, bringing new elements to corporate governance, professional standards, compliance requirements and product innovation, bringing international concepts and best practice rules, which has a positive role in promoting the mainland market." Wong Wong Ci Ming said.

Maintain close communication at home and abroad

In recent years, many Hongkong asset management institutions have sold flagship products to the mainland through mutual recognition funds. However, the types of mutual funds approved by North China are still few and can not fully meet the needs of investors.

In response to this problem, Wong Wong Ming explained, "mutual recognition fund is a good channel, but there are not many kinds. In fact, because of too many regulations, many companies who are interested in participating in the plan are sighing, and we have been reflecting with regulators.

"For example, the scale of sales in the mainland accounts for no more than 50% of the total assets of the capital, and the investment management can not be entrusted to overseas investors." for foreign capital, they want to participate, but they are restricted by laws and regulations. Wong Wong Ming further added. At the beginning of this year, the Hongkong Investment Fund Association and Ernst & Young jointly issued the "Hongkong asset management industry survey report 2018". Three proposals were put forward to promote and promote mutual recognition of mutual funds between Hongkong and Tai Wan.

Including the average reciprocal processing time of the Hongkong Securities Regulatory Commission under the mutual recognition of mutual funds, the mainland regulatory authorities will shorten the approval process for the sale of each eligible Hongkong registered fund in the Tai Wan area to three months; relax the investors in the competent area can hold a 50% sales quota to reflect the difference in population and scale; allow Hongkong fund management company to appoint investment functions to overseas fund management companies in the same group, so that investors in the Tai Wan area can benefit from the global professional services of the fund company.

It is worth noting that although there is still much room for improvement, Wang Ciming's recognition of the opening up of the mainland's capital market in recent years has been highly recognized.

It said: "in the past period, the mainland regulators and overseas investors and overseas regulatory bodies are very close. They are very practical. As far as possible, within the scope permitted by the legal framework, in line with the investment needs of overseas investors, such as law and taxation, strengthening such communication will make the market develop healthily."

In its view, (MNCs) can not ask the mainland market to completely change its structure and framework to match overseas markets, for example, the mainland stock market is penetrated (regulatory), while overseas markets usually use only omnibus account mode. Even though some penetrating arrangements are not penetrated into the market, there is a different practice in every market. We need to understand each other, seek common ground while reserving differences, and communication is the most important.

"On the one hand, we should try our best to meet the needs of overseas investors and take into account the situation in the mainland market. For example, the mainland stock market is mainly retail investors, and mainland investors are not familiar with overseas investment markets. But as long as we maintain close communication and solve problems together, the development of this market is very optimistic." Wong Wong Ci Ming said.