The Hong Kong government submitted a proposal last week for a HKD100 billion investment scheme that would make way for offshore investment in the country. However, bankers and brokers believe that the proposal, dubbed QDII3, could take a long time before Beijing approves it, according to South China Morning Post.
The QDII3 proposal wants Beijing to grant the said investment budget to allow Qianhai brokers and insurers to make direct investments in Hong Kong bonds, stocks, and yuan investment products. This project would benefit Hong Kong's status as an offshore yuan center, said the report.
Qianhai is an experimental economic zone for freer currency convertibility. The zone has already allowed 15 banks in Hong Kong to make offshore yuan loans. However, it would be difficult to convince Beijing to approve the QDII3 scheme, according to a local broker, the report stated.
Christopher Cheung Wah-fung, a financial services functional constituency lawmaker, said most of the firms in Qianhai were enterprises from mainland China. He said only a few Hong Kong firms were represented in the economic zone, the report said.
Cheung explained: "This means even if QDII3 were to be implemented, it would be of more benefit to mainland firms seeking to access overseas markets and would bring little business to Hong Kong banks or brokers. Unless the scheme required mainland firms to trade through locally based financial firms, I do not think this proposal would bring much new business to the local financial community."
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