Many expect China will soon being experimenting with the Qualified Domestic Individual Investor (QDII2) scheme that the country's central bank announced last month.

Now might not be the best time to launch this widely-anticipated plan though, especially if Hong Kong is to serve as the testing ground.

Hong Kong's equity market started rising in 2009, boosted by economic recovery on the Chinese mainland and easing monetary policies in the US. Yet, the market in the region has reached a point where it has little room left to grow further. Even more distressing is the fact that Hong Kong's real estate market could be in midst of a dangerous bubble. With conditions the way they are now, it would be foolhardy to allow individual investors on the mainland, who are generally less skilled in risk management compared to institutional investors, to tap Hong Kong's market at this time.

The author is Lu Zhengwei chief economist of Fuzhou-based Industrial Bank.