ALFI Interview - Lieven Debruyne chairman of HKIFA (Hong Kong Investment Fund Association)

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• published: 15 Oct 2013
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"Mutual fund investment in Hong Kong is up 40%", Lieven Debruyne, chairman of HKIFA (Hong Kong Investment Fund Association) says. However, according to Mr. Debruyne, the rush to buy mutual funds can't disguise the fact that Hong Kong investors haven't yet returned to equity funds and are still very risk averse. Mr. Debruyne also talks about his Association's top priorities ; the negotiations between the regulators of mainland China and Hong Kong about mutual recognition and the internationlisation of the Renminbi. Transcript of the video: What are the latest trend in the Hong Kong investment funds market? I think there’s a few trends and they’re all actually quite positive. The first trend is that investors have really been buying mutual funds again with a vengeance. So the sales of mutual funds are up a lot over last year and last year was already very strong year. So if you look at 2013 first half growth sales of mutual funds are about up 40 percent and that sales up about 30 percent. So there’s a very strong demand for mutual funds. The second trend is that income funds really dominate the mutual funds’ sales. So investors are really been looking at an income fund, a yield fund, really to offset the very low interest rate environment. But this has not just come through just bond funds. Multi asset income funds, so funds is not combine different asset classes to provide a yield have been part of where investors have focused. The third trend is that really even though equity markets have performed very well, investors have not returned yet to equity funds. And this is a bit different from Europe and the US where equity funds have seen stronger sales. So it shows that, although equity market have done well, investors buy in large are still quite risk averse and have not really returned back to buying a higher risk equity fund. So I think those are kind of three elements where you see some various distinctive elements for the Asian mutual fund market. Are UCITS still relevant for Hong Kong? I thinks UCITS very relevant. If you actually look at the fund sales this year, again three quarters of the sales have come through UCITS. Large, global mutual funds is what people been buying and the income funds that are being sold in the market, have generally been the UCITS funds. Do you expect plans for a regional integrated market for investment funds? Well the big other theme in the market is around the negotiations been a Hong Kong regulator and a Mainland Chinese regulator around mutual recognition. A mutual recognition would mean, domestic funds that are being alowed in both those markets. And if that kind of comes through I think that will have a major change to the market and might be beginning of a more regional cooperation. What are the main priorities and challenges for HKIFA? So the main priorities are really linked to the mutual recognition. We as an association want to work with both regulators, the regulators in Hong Kong and in China. Around helping them how we can best achieve a platform that can coordinate the sales of mutual funds across Hong Kong and China. I think the next step with that will also be how we involve Taiwan and become really a part of a greater China initiative. And all of this then comes in to play also linked to the Renmimbi. The renmimbi internationalization and Hong Kong being the key off shore market for Renmimbi, means that we want to make sure that the product developed around Renmimbi and through our RQFII (so the Renmimbi qualified foreign investment scheme) is going to be a success in Hong Kong. A lot of quota has been allocated by the Chines authorities. We now need to make this quota work and make that work in good investment products for the investors in Hong Kong and beyond. So those will be the two areas we focus at the moment as a HKIFA for the Hong Kong investment fund market.