Li said it was understandable that people are interested in the Hong Kong stock market. Currently, Li believes the mainland A-share market has a high price/earning ratio, meaning it is a riskier investment. Also, there are over 300 domestic funds investing in the mainland stock market and it is difficult to choose. The Harvest QDII is mainly targeted at the Hong Kong market, which might bring new investment opportunities.

Zhang Yingzhu from United Securities said the Hong Kong stock market is following the trend of the mainland A-share market and the profit from Hong Kong market is supposed to be relatively high.

During interviews, Beijing Review found that some investors were cautious about investing in Harvest QDII. "I was caught in a Catch-22," said Luo Hai, a fund investor. "I have limited money and I haven't decided which fund to buy. Moreover, it is hard to say how much return QDII funds can bring."

Due to the poor performance of the previous QDII funds, many people worry about the performance of the new QDII funds. "A lot of people still believe the most profitable market is the mainland A-share market, and they'd rather invest there," said Zhang.

Mister popular

For those new to the overseas stock market, QDII funds are among the first choice. The fund managers of QDIIs are from major fund management companies-they have good reputations and are well trained. In overseas stock markets, institutional investors have the upper hand and individual investors are weak in terms of information and capital. Meanwhile, if a stock brokerage company goes bankrupt, investors cannot get their principle back. But QDII funds are trusted in large banks and investors need not fear the possibility of bankruptcy.

Mainland banks are among the first batch to acquire licenses to operate QDII products. But banking QDII funds are not as popular as QDII funds managed by fund management companies. The second QDII product of Bank of China began to raise money as of September 17. A month later, its QDII quantity was still unfulfilled.

It is widely believed that the QDII funds of fund management companies will have a better performance than banking QDII products in terms of investment scale, profitability and management ability.

The major differences in the two kinds of QDII products lie in the investment scale. The banking QDII funds are largely restricted by policies and no more than 50 percent can be invested in stocks and they can only invest in the Hong Kong market. But QDII products of fund management companies have almost no limitations and can invest in the 33 countries and regional markets that have signed understanding memorandum with the China Securities Regulatory Commission.

Moreover, those who want to invest in banking QDII products must invest at least 50,000 yuan, which is 50 times more than the 1,000 yuan asked for by the QDII products of fund management companies.

Ma Jingru, a researcher with Bohai Securities, said investors have higher expectation for QDII products operated by fund management companies, while the banking QDII products are generally considered steady.

A-H share market connections

Many QDII fund investors are encouraged by the interconnection between the mainland and Hong Kong stock markets. After the national holiday, affected by the surging Hong Kong market, the mainland stock market closed at record highs on successive days. The Hong Kong shares (H shares) of Industrial and Commercial Bank of China (ICBC) and China Life increased 9.9 percent and 8.2 percent respectively during the holiday. On October 8-the first trading day in October on the mainland-A shares of ICBC reached the upper limit of a 10-percent growth in a day, and China Life grew over 8 percent.

"When more mainland investors invest in the Hong Kong market, the interconnection between the two markets will be further strengthened," said Ma, saying that the two markets will follow a similar development trend, meaning the ups and downs of the two markets will have greater impact on each other.

Information from the China Banking Regulatory Commission shows that 22 domestic and foreign commercial banks have acquired QDII licenses in the first half of this year and raised about 13 billion yuan. Apart from that, fund management companies like China Southern Fund Management and Harvest Fund Management, and securities companies like China International Capital Corp. Ltd. and Merchants Securities, have also been granted QDII licenses.