(China Alert) MRF: The first movers

CSRC has finally revealed the product lodgings for Hong Kong managers wishing to sell into China under the Mutual Recognition of Funds (MRF) scheme. Nine products had been lodged as of August 7 between seven managers, by our estimates there are two notable omissions that may follow shortly. The Chinese regulator also clarified an up-to-six month approval period between application and fundraising, ruling out (for now) fast tracking of any MRF fund approvals. The six month approval period may be a blessing to these initial participants considering recent market volatility culminating in a currently weak mainland fundraising environment. While Z-Ben Advisors maintains its firm belief that MRF is a long-term play with little scope for short-term gains, movements by these initial participants and those that follow thereafter will set the tone for pragmatic entry into China under one’s own brand.

As expected, the initial participants in the MRF scheme are largely firms that have a mainland joint venture. Initial managers are household names……

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