China to relax HK-Mainland MRF rules – Chinese firms face barriers to 'unlock' Middle East wealth – Funds industry net zero goals 'stalled'
Welcome to Ignites Asia's News Brief, a roundup of a few of our top stories from the past week.
Chinese regulators have proposed amendments that would potentially remove limits to fundraising and registration of global funds in a cross-border scheme with Hong Kong. The Mutual Recognition of Funds scheme restricts assets raised for funds sold in the mainland to 50% of total assets, while investment functions need to be based in Hong Kong.
Industry participants say the "long-awaited" reforms could increase manager participation in the HK-Mainland MRF scheme, but there are still questions over fund approval times. Read more about the proposed changes here.
Growing ties between China and the Middle East has thus far not translated into "real investment opportunity" for mainland fund firms, industry experts say. Chinese managers lag behind global peers in building out on-the-ground operations and developing regional partnerships, which are key to accessing the immense institutional and individual wealth in the region.
Chinese fund groups and other "niche" Asian managers could have an advantage in pitching emerging market strategies to family offices or HNWIs, however. Read more about opportunities and challenges for Chinese managers in the Middle East here.
The fund industry's drive towards achieving net zero goals has "stalled" due to macroeconomic challenges and a slowdown in flows into ESG funds, according to BNP Paribas AM. The decision by large U.S. fund firms to step back from Climate Action 100+ also risks sending mixed messages to investor clients, the European manager warns.
Other funds experts acknowledge "headwinds" in the net zero space but argue that ESG flows in Europe remain strong and Asian investors are increasingly active in sustainability initiatives. Read more about the state of net zero progress in the industry here.
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Graph of the week
BlackRock, Vanguard, Fidelity, and Dimensional account for 75% of the US$6.46 billion invested in blacklisted Chinese companies, according to a report released by the U.S. Congress last week. The report was part of Washington's efforts to crack down on investments into companies allegedly involved in Chinese human rights abuses and military sector. Read about U.S. firms' China investments here.
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