A LONG-AWAITED program to allow funds domiciled in Hong Kong and the mainland to be sold in each others’ market will be launched July 1, regulators said Friday, in a move to facilitate cross-market investment.

    Deng Ge, a spokesman for the China Securities Regulatory Commission, said the initial quota for mutual fund recognition would be 300 billion yuan (US$48 billion) in each direction.

    “This will help attract overseas capital into the domestic capital markets,” Deng told a weekly news conference in Beijing.

    He added that funds would need to have been established for at least one year and based on that criteria, around 100 Hong Kong-based and 850 mainland funds will qualify.

    Mainland and Hong Kong regulators started discussing mutual recognition for fund products in 2012 and reached a preliminary agreement in 2013.

    However, the plan had been on the backburner as the Central Government focused on other programs to liberalize the mainland capital market, notably the stock connect between Shanghai and Hong Kong, analysts said.

    Under the mutual fund recognition program, Hong Kong is aiming to encourage money managers to base their funds in the city as it looks to correct a historic skew that has reduced it to largely a sales and marketing hub for funds.

    It will give fund managers greater incentive to set up more Hong Kong-domiciled funds, lead to more jobs in the city and consolidate Hong Kong’s position as the leading asset management hub in Asia.

    To mainland asset managers, the program also offers a good opportunity for them to expand overseas and tap foreign investors as they aim to play a more important role in the international stage. (SD-Agencies)