Wealth Management Connect: HSBC, Standard Chartered join top banks to expand cross-border investment schemes and increase sales in the Greater Bay Area

The People’s Bank of China (People’s Bank of China) Guangdong Branch on December 12 completed 12 days of consultations on wide-ranging relaxations to the system, including tripling the individual limit from 1 million yuan to 3 million yuan (US$420,745) did. The new measures will also lower the threshold for mainland investors to transact under the system, broadening their product choices and allowing securities companies as well as banks to sell products.

The new measures will also ease the sales process, allowing banks and securities companies to introduce product information to investors, instead of the current practice of only executing orders but not introducing products.

HSBC co-CEO Asia Pacific, David Liao, said: “We expect this proposal to further increase participation in our Wealth Management Connect scheme for cross-border investing. “This will expand the scale of the testing program.” “We are considering this proposal and are preparing to seize the potential opportunity.

“The proposed enhancements will enable more residents in the Greater Bay Area to have more diverse investment options. This will allow investors to tailor their investment portfolios according to market conditions and risk appetite. This will allow for more flexible adjustments.”

Wealth Management Connect scheme expands eligibility, product range and limits

The plan, launched in September 2021, is Beijing’s first customized plan for 11 cities within the development area. This will enable 24 banks, including HSBC and Standard Chartered, to sell Hong Kong investment products to residents of mainland cities within the zone through 31 partners.

As of the end of October, the scheme had attracted about 62,900 investors, with 8.66 billion yuan invested, according to government data. This is only about 3% of the total quota of 300 billion yuan under the system.

Demons in the Greater Bay Area blueprint thwart cross-border wealthy plans

Hong Kong Bankers Association Chairman Sun Yu, who is also BOCHK’s vice chairman and CEO, also welcomed the enhancement of the wealth management scheme.

“Strengthening the Wealth Management Connect Plan will support the development of cross-border trade, facilitate cross-border renminbi flows, and pave the way for the development of the Greater Bay Area’s financial sector.” he added.

Charlene Wong, senior industry analyst at Bloomberg Intelligence, said sales would grow further under the scheme as investors in the Greater Bay Area need to diversify their investments.

Hong Kong and mainland China officials plan to revamp Wealth Management Connect system

“China’s policies to stimulate economic growth, investors’ diversification needs and the widening interest rate differential between the US and mainland China should increase demand for financial products,” Wong said.

The cumulative value of wealth management and fund products held by investors in Hong Kong and Macau amounted to 227 million yuan as of the end of October, remaining almost unchanged over the past six months. From the beginning of this year to the end of October, monthly northbound sales ranged from 15 million yuan to 29 million yuan, Wong added.

“The Greater Bay Area Development Zone will be a growth engine for our business,” Mr Lee said. “Wealth Management Connect scheme sales are expected to increase in the future due to relaxed sales processes, increased quotas and additional product choices.”

Catelyn Kou, president of the Hong Kong Securities Association, said allowing brokerages to sell institutional products is a positive.

“However, not all of the approximately 600 brokerages in Hong Kong will benefit, as not all brokerages have a license to sell mutual funds,” she added. “Only brokers with asset management licenses will benefit from this move.”