Hong Kong funds sold out quickly after quota increase
Demand driven by low domestic yields and yuan depreciation
MRF scheme attracts global interest amid QDII quota scarcity

HONG KONG, Reuters Chinese investors are buying up large amounts of Hong Kong mutual fund products that invest overseas, particularly in bonds, after authorities expanded a crossborder trading channel this month and opened an avenue to get better yields.

Several mutual funds that are registered in Hong Kong and allowed to market products to mainland investors were sold out within 24 hours of opening for subscription at the beginning of the year, fund statements show.

The funds had reopened for subscription in the past week after China relaxed limits for Hong Kong funds that are approved to sell on the mainland under the Mutual Recognition of Funds MRF scheme. It lifted the sales quota to a maximum of 80 of the funds39; total assets from Jan. 1 from the previous 50 limit.

The investment frenzy points to pentup demand in China for overseas investments at a time when bond yields are hitting record lows at home, the yuan is at 16month lows, and the stock market is struggling.

We39;ve seen robust demand for overseas fund allocations, given the outperformance of overseas markets in the past two years, said Niki Wu, senior research analyst at Morningstar, based in Shenzhen.

Funds that focus on U.S. Treasuries and other bonds seemed most popular with investors.

Two bond funds run by JPMorgan…