In a significant step toward making the yuan a global currency, China opened its financial markets to allow cross-border sales of mutual funds between it and Hong Kong starting July 1.

“Mutual recognition gives foreign investors more channels to access the Chinese market and hence boosts the cross-border flow of yuan,” Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia told Bloomberg. “That will facilitate China’s ambition to make the yuan a global reserve currency as it further opens up the capital market. That’s a positive for the yuan.”

The initial quota will total 600 billion yuan ($97 billion), split evenly in each direction, regulators in China and Hong Kong said in a joint statement on Friday.The mutual recognition will allow foreign asset-management firms to sell directly to Chinese consumers, while Chinese firms sell to offshore investors. The first group will include only general equity funds, bond funds, mixed funds, unlisted index funds and physical index-tracking exchange traded funds (ETFs.)

In a separate statement, the Hong Kong’s Securities and Futures Commission said for a Chinese fund to be eligible for the program, it must be more than a year old and have more than 200 million yuan in assets under management. The funds must not primarily invest in Hong Kong’s market, according to the statement. Also, the value of units in funds sold to investors in Hong Kong can’t be more than 50 percent of the value of a fund’s total assets.

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