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Enoch Yiu

The Chamber of Hong Kong Listed Companies is urging the pension regulator to relax rules so the 4.8 million members of the Mandatory Provident Fund (MPF) can invest more in Hong Kong-listed exchange-traded funds (ETFs), according to its chairman.
“ETFs can provide stable returns to MPF members while charging low management fees,” said chamber chairman Chan Ka-keung in a media briefing last week. “If more members can invest in ETFs, it would [broaden their] choices, while the city would also be promoting these types of investment products.”
More ETFs based in Hong Kong would help promote liquidity in the local capital market, Chan said. “It will be a win-win situation for the MPF and the stock market,” he added.
The chamber plans to submit the proposal to the Hong Kong government, which is currently conducting a two-month public consultation on its first five-year plan.
Chan is also chairman of digital lender WeLab Bank and Hong Kong’s former secretary for Financial Services and the Treasury.

The chamber cited market estimates showing that of the HK$1.5 trillion (US$191 billion) in MPF assets as of March, about 10 to 15 per cent were invested in ETFs, but most were listed overseas. Only about 2 to 5 per cent were invested in Hong Kong-listed ETFs.
Chan said that allowing more MPF assets to flow into Hong Kong-listed ETFs would keep pension funds in the local market and strengthen the city’s capital markets.
In the short term, the chamber wants the Mandatory Provident Fund Schemes Authority (MPFA) to streamline approval for Hong Kong-listed and Hong Kong-domiciled ETFs, so that once they meet listing and domicile requirements, they are automatically eligible for MPF investment without individual approval.
“This approach would be in line with what the MPFA recently did to streamline approval for gold ETFs, allowing more MPF investment in the product,” Chan said.
For the longer term, Chan suggested the MPFA consider following the Australian pension model, which allowed members to directly invest part of their pension money in assets of their choice. Currently, members can only invest in designated MPF funds.
“This would allow employees to have more control and more choices,” Chan said. “Initially, maybe the MPFA could limit members to investing in simple ETFs to ensure they do not take excessive risks,” Chan said.
In response to the chamber’s call, the MPFA said it welcomed suggestions to enhance the MPF, including facilitating the use of suitable ETFs in MPF funds to diversify investment, but stressed the approval process must protect scheme members from excessive risks.
“The wider use of ETFs by MPF trustees and investment managers has enriched the MPF fund range, which suits the needs of retirement investment,” an MPFA spokesman said in a statement.
Earlier this month, the MPFA changed its approval mechanism for gold ETFs, moving from individual to categorical approval. The change allows MPF investment funds to allocate up to 10 per cent of their assets to gold ETFs, provided they meet certain criteria, without seeking individual approval.
MPFA data showed total MPF investment in Hong Kong listed ETFs reached HK$75.7 billion as of March, a 120 per cent increase over the past three years. Investment in other unlisted index funds rose 56 per cent to HK$118.2 billion over the same period.


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Relaxing rules to widen ETF access will deliver stable returns at low cost while boosting local markets, chamber says


Relaxing rules to widen ETF access will deliver stable returns at low cost while boosting local markets, chamber says.


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Rule change urged for Hong Kong pension fund to allow wider ETF choice for 4.8m members

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Relaxing rules to widen ETF access will deliver stable returns at low cost while boosting local markets, chamber says

Relaxing rules to widen ETF access will deliver stable returns at low cost while boosting local markets, chamber says