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

Official think tank urges broader retirement-fund investments, more mainland institutional capital and reforms to boost listings, bonds and corporate restructuring

Hong Kong should consider allowing the Mandatory Provident Fund to invest in more asset classes, and lure more long-term patient mainland capital, such as pension funds, to invest globally through the city, the Financial Services Development Council (FSDC) said in a report on Tuesday.

The MPF, the city’s compulsory retirement scheme, now has total assets of HK$1.67 trillion (US$213 billion) and invests in stocks, bonds and deposits. The FSDC suggests allowing a portion of the funds to be invested in alternatives and infrastructure.

FSDC executive director Rocky Tung Yat-ngok said mainland patient capital, including insurance companies and pension funds, had strong interest in investing overseas to diversify risk and achieve higher returns.

“There is an appetite for this patient capital to invest via Hong Kong in different currencies, including the yuan,” Tung said during a media briefing on Tuesday. “It would be important for Hong Kong to develop more long-term fixed-income products and other investment choices to meet the demand of the insurance and pension funds.”

The council also urged the city to implement further reforms to reduce the time and costs associated with new listings and other fundraising activities, and to introduce a corporate rescue plan to help troubled companies restructure.