The First European Fund Is Allowed To Invest In Shanghai And Hong Kong

As of last Friday (November 28th), Shanghai and Hong Kong through operation has reached 10 trading days, but the market has lost heat slightly. However, last Friday's news made the market a bit overjoyed: according to Bloomberg report, Luxemburg approved the first European fund to participate in Shanghai and Hong Kong. However, due to Luxemburg, the principal fund regulator in Europe Finance The CSSF does not think that Shanghai and Hong Kong can guarantee the rights and interests of European investors. Therefore, it is difficult for the European fund to invest in Shanghai and Hong Kong through a large scale.

　　 Status quo: most European funds do not exist Shanghai-Hongkong Stock Connect

Since November 17th, Shanghai and Hong Kong have officially opened the floodgates, there are many bright spots in the two markets. For example, when the central bank announced the first trading day after the interest rate cut, the Shanghai Stock Exchange's first seat on the special seats was first published in the billboard and bought about 160 million Yuan Baoli real estate on a single day. However, with regard to the overall heat of the two places and the daily usage quota of Shanghai and Hong Kong, the enthusiasm of investors is still not as good as expected.

Reporters noted that, according to last week's road quoted by a number of banks, fund managers and lawyers, many large European funds are not yet able to participate in investment in Shanghai and Hong Kong unless the CSSF, the main European Fund regulator, confirms that the interests of investors can be fully protected by the Shanghai and Hong Kong Exchanges.

Thanks to low tax rates, there are about 13000 global mutual funds, that is, 2/3 of European funds are registered in Luxemburg and are regulated by CSSF. Luxemburg manages assets totaling 3 trillion euros (US $3 trillion and 700 billion), including giants such as BlackRock, dunpton and fidelity.

According to market participants, CSSF wants to ensure that once the stock trusteeship or exchange fails, EU investors who participate in the Shanghai Hong Kong through mechanism can safely recover their funds. The bankruptcy of Lehman brothers in 2008 caused billions of fund assets to be involved in bankruptcy liquidation, which made investors and regulators sensitive to trust arrangements.

Many market participants said that CSSF questioned whether the Hong Kong and Shanghai Tong was in line with the European regulations governing personal investors' custody of assets through mutual funds, that is, the European Union's convertible securities collective investment plan (UCITS).

The reporter noted that according to the relevant provisions of the European Union on mutual funds, the trustee bank must conduct all-weather supervision over the client funds. In Shanghai and Hong Kong, the Shanghai Stock Exchange is held through the complex structure of the three parties of the trustee side, the Hongkong clearing house and the Shanghai clearing house, which makes it difficult for the custodian to carry out all weather supervision obligations.

Some lawyers said that the concept of beneficiaries was not clearly pointed out in Chinese law, which means that foreign investors may not be able to prove that they own a single stock if problems arise.

　　 Outlook: large-scale investment in Shanghai and Hong Kong is still needed. time

However, last week five, according to Bloomberg news, Luxemburg financial regulator said that the first European fund to participate in Shanghai and Hong Kong had been approved the previous day. The report also pointed out that all funds registered with Luxemburg can not invest in Shanghai and Hong Kong without obtaining the approval of regulatory authorities. The regulator warned that the availability of investment approval is a specific case analysis, and there is no consistent guidance for all funds. However, the first European Fund has been allowed to participate in the transaction between Shanghai and Hong Kong. The industry has pointed out that its significance is extraordinary. Overseas incremental capital has entered the domestic market, and the further activation of Shanghai and Hong Kong seems to have begun to dawn.

Zhou Songgang, chairman of the Hongkong stock exchange, said during a visit to a radio program last week that the HKEx had regular communication with European regulators, and would also explain to the Chinese investors and European fund investors the "Hong Kong and Shanghai Tong" issues in the future. He believes that the "Hong Kong and Shanghai Tong" system of celebrities does not have a particularly big problem, because the system can authenticate the investors who hold the stock last, while the Shanghai Hong Kong Stock Exchange has little chance to go bankrupt, so the risk is not great. Zhou Songgang said, "Shanghai and Hong Kong through a new mechanism, there is no doubt that the market doubts, and the exchange will clarify relevant issues in the law, but also need time to run in with different investors."

Liang Junfei, director and investment adviser of Hang Seng Investment Services Limited, told the daily economic news reporter that "when foreign capital makes an investment decision, it needs to perform certain procedures, and the whole decision-making process is difficult to reach in a very short time. When money is not coming so fast, you may feel a little disappointed. In fact, QFII has been developing for more than 10 years before it becomes a mature QFII market. It is believed that Shanghai and Hong Kong will also need some time.

Liang Junfei said, "we have seen a lot of fund managers, many of the funds said they would participate in the Shanghai and Hong Kong Exchanges, but they needed the approval of the regulatory authorities before joining them. Like ValuePartner, many of its funds are registered in the Hongkong Securities Regulatory Commission, which requires approval before they can put money in. Before we think of Shanghai and Hong Kong through the operation of the situation is too simple, a lot of work needs to be done later, in order to truly scale investment in Shanghai and Hong Kong through.