The Chamber of Hong Kong Listed Companies is urging the city's pension regulator to relax investment rules for the 4.8 million members of the Mandatory Provident Fund (MPF) to allow greater access to Hong Kong-listed exchange-traded funds (ETFs). This proposal was announced during a media briefing by chamber chairman Chan Ka-keung, who emphasized that ETFs could provide stable returns at lower management fees for MPF members.
Key Details
Chan stated that increasing the availability of Hong Kong-listed ETFs would broaden investment choices for members and enhance liquidity in the local capital market. He described the initiative as a potential
win-win situation for the MPF and the stock market.
The chamber plans to submit this proposal to the Hong Kong government, which is currently engaged in a two-month public consultation regarding its first five-year plan.
Background
According to the chamber, as of March, the MPF held approximately HK$1.5 trillion (US$191 billion) in assets, with only 10 to 15 percent allocated to ETFs. Most of these investments are in overseas-listed ETFs, while only 2 to 5 percent are in Hong Kong-listed options. This disparity highlights the limited choices available to MPF members in local investment products. Chan, who is also the chairman of digital lender WeLab Bank and a former secretary for Financial Services and the Treasury, believes that easing these restrictions could significantly benefit both investors and the local market.
The proposed changes could lead to increased investment in Hong Kong-listed ETFs, potentially boosting the local stock market and enhancing liquidity. Investors may see a shift in asset allocations within the MPF, impacting sectors related to ETFs and local equities.
Watch for the outcome of the public consultation and any subsequent government decisions regarding the proposed rule changes.