HSBC China pioneers cross-border fund services for mainland investors
Despite the cross-border trading crackdown, analysts say Beijing will continue to allow investment in overseas markets via legal channels
HSBC China has become the first foreign bank to provide custodian services for a cross-border fund product that can help mainland clients invest in foreign markets, the lender said.
China’s capital controls mean that mainland businesses and individuals are not technically allowed to deposit their money in offshore bank accounts or invest directly in equities and bonds abroad.
However, mainland investors can opt for investment schemes such as QDLP, under a quota system, which allows institutions to raise capital from mainland investors before converting their funds into foreign currencies to buy overseas-listed bonds and equities.
QDLP would continue to be an important mechanism for China to open up its capital market to the world, said Tom Chan Pak-lam, honorary president of the Institute of Securities Dealers.
“HSBC China’s involvement in the scheme is an indication that Beijing will continue to encourage mainland investors to invest in overseas markets as long as it is through the proper channels such as the Stock Connect schemes or the QDLP,” he said.