China has tightened a cross-border investment scheme that allows mainland and Hong Kong investors to buy each other’s funds, potentially curbing flows into popular overseas markets such as the United States, Bloomberg News reported, citing people familiar with the matter.
The curbs apply to the decade-old Mutual Recognition of Funds programme, which has assets of up to US$86 billion (HK$670.8 billion) and enables offshore funds to tap mainland Chinese capital. Under the new approach, regulators are placing limits on where funds raised from mainland investors can be invested, the people said.
The new measures are aimed at protecting retail investors who have poured into the scheme since last year and will apply only to newly launched funds, the people said.
According to documents seen by Bloomberg, the China Securities Regulatory Commission issued guidance to participating Hong Kong funds in the second half of 2025, saying it would raise requirements based on retail investors' risk tolerance and ensure greater diversification in asset classes and geographic exposure. Such requirements had not existed previously, the sources added.
