Expand Hong Kong’s MPF investment choices, lure mainland pension funds: financial council

The Financial Services Development Council (FSDC) in Hong Kong has proposed expanding investment options for the Mandatory Provident Fund (MPF) and attracting more long-term mainland pension funds to invest globally through the city. Currently, the MPF, which manages HK$1.67 trillion (USD 213 billion) in assets, invests primarily in stocks, bonds, and deposits.

The FSDC suggests permitting a portion of these funds to be allocated to alternative investments and infrastructure projects. Additionally, the council recommends reforms to reduce the time and costs associated with new listings and fundraising activities, as well as a corporate rescue plan to assist troubled companies in restructuring.

These suggestions come from feedback gathered from over 600 market participants on how to bolster Hong Kong's capital market. The report was released just before Chief Executive John Lee Ka-chiu is expected to unveil the city's first five-year plan on September 16. The FSDC, a government-backed research organization, aims to bolster Hong Kong's status as an international financial hub.

Many of its prior recommendations have already been implemented by the government and regulators. With heightened global uncertainties, investors are seeking opportunities that offer growth, market stability, and risk diversification. Benjamin Hung, vice-chairman of the FSDC, emphasized that the report serves as an execution roadmap focused on five key areas: issuer, investor, intermediary, instrument, and infrastructure.

By creating an open and interoperable ecosystem that supports companies, investors, and intermediaries across the market, Hong Kong can transform its role as a "superconnector" into a global capital nexus, according to Hung. Other recommendations include broadening the Wealth Management Connect scheme and ETF Connect, and promoting the issuance of HKD and CNY-denominated bonds.

The report also calls for a review of the definition of a professional investor to acknowledge digital-asset holdings held in secure custody with Securities and Futures Commission-licensed platforms.