Staff reporter
Hong Kong plans to amend the law to allow mandatory provident funds to invest in bonds backed by Beijing and three policy banks, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu wrote in his blog yesterday.
To lift the existing restriction, the government will amend the legislation governing MPF investments to include the Central People's Government and three policy banks in the scope of "exempt authority."
At present, "exempt authority" includes the HKSAR government as well as any government, the central or reserve bank of a country or territory, or any multilateral international agencies with the highest credit rating.
"As the HKSAR is an inalienable part of our country, the CPG should be exempted in the same way as the SAR government from investment restrictions in respect of credit ratings as stipulated in the relevant legislation governing MPF investments," Hui wrote.
This policy initiative involves amendments to subsidiary legislation.
If it is supported by the new Legislative Council, the amended legislation will come into force upon completion of the amendment exercise by the middle of next year the earliest, Hui said.
The government will relax the relevant investment restrictions in a progressive manner, with a focus on bonds issued by the CPG and three policy banks at the current stage. Under the new law, each MPF fund may invest up to 30 percent of its funds in their bonds of the same issue, Hui said, who added that it may also choose to invest all of its funds in such bonds of at least six different issues.
Following the news, the Mandatory Provident Fund Authority, the regulator of the pension scheme, said that it welcomes Hui's announcement about the details of facilitating MPF investment into bonds issued by the CPG and mainland policy banks.
MPFA chairman Ayesha Macpherson Lau said: "This initiative will further diversify the products for MPF investment, which is not only responding to the MPF industry but also helping MPF members seize the opportunities in the mainland bond market to strive for better returns. The MPFA will provide full support to the government in pursuing legislative amendments in order to implement the relevant measure."
