Hong Kong’s Insurance Authority is touting a tie-up between the city and mainland China’s insurance markets, Moses Cheng, the chairman of the regulator, told local media on Tuesday .
Th e authority wants mainland residents who bought insurance policies in Hong Kong to be able to pay their premiums and make claims from China. Cheng said he has discussed the idea with officials at the China Banking and Insurance Regulatory Commission and the State Administration of Foreign Exchange (Safe). They broadly welcomed the idea, but cited concerns over capital outflows.
Cheng recommended following the ‘closed loop’ FX management policy under Stock Connect, where southbound investors’ capital must return to the mainland after they sell their stocks. The same goes for northbound investors in Hong Kong.
About 1.88% of global payments were made in RMB in May, according to Swift’s RMB tracker. This made the renminbi the fifth most used currency in the month, overtaking the Canadian dollar. The value of RMB payments went up by 15.25% month-on-month, way over the 1.81% average gain among all currencies.
Hong Kong remains the largest offshore RMB clearing centre, according to Swift, clearing 75.44% of all RMB payments outside China. It was followed by the UK and Singapore, which had market shares of 5.64% and 4.57%, respectively.
DBS is in talks with Chinese regulators to set up a securities joint venture in the onshore market, after the securities watchdog lifted a foreign ownership cap to 51% earlier this year, according to a June 27 state media report. Neil Ge, CEO of DBS China, made the comments at a press conference in Beijing this week. He added that the Singaporean lender will explore opening more branches in the mainland.
Northbound flows slowed down in the Hong Kong-Mainland China Mutual Recognition of Funds (MRF) programme in May, according to Safe’s data. Overall net sales of Hong Kong funds in the mainland stood at Rmb11.3bn ($1.7bn), down by Rmb180m from the previous month.
In contrast, southbound flows picked up in the same period. Overall net sales of mainland funds in Hong Kong were Rmb429m, up from Rmb419.7m in April.
Citi’s onshore arm has been awarded the licence to act as a Futures Margin Depository Bank (FMDB) in the onshore market, the first US bank to get the right, the lender said in a June 29 press release.
The licence will allow Citi to better service foreign investors using the qualified foreign institutional investor (QFII) and RMB QFII programmes. These investors are required to open a margin deposit account with a licenced FMDB when trading equity futures instruments on the China Financial Futures Exchange, said the bank.
An Irish asset management company has become the first RQFII participant from the country, HSBC, which helped the firm secure the approval, said in a June 21 press release.
The programme allows the Irish manager to invest directly into onshore equities and bonds. HSBC’s securities services unit will act as the manager’s custodian in China .
Ronni e Griffin, global head of trustee and fiduciary services of HSBC Securities Services, said the approval is a win for Ireland.
“It shows how Ireland has developed its international fund servicing and domicile capabilities for both managers and funds to facilitate access to China through various channels including QFII, RQFII and Stock Connect.”
State Street Global Advisors (SSGA) and China’s E Fund Management said they will develop an A-share equity strategy focused on companies which have higher environmental, social and governance (ESG) scores, SSGA said in a June 27 statement.
The two asset managers said research has suggested that companies with higher ESG scores outperform other firms and offer long term value to investors. The new strategy will target companies which are carbon-efficient, making green revenues, and have better environmental policies.