(From left) Chief Executive of the Hong Kong Monetary Authority Eddie Yue Wai-man; Deputy Director of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region (HKSAR) Yin Zonghua; HKSAR Chief Executive Carrie Lam Cheng Yuet-ngor; HKSAR Financial Secretary Paul Chan Mo-po; HKSAR Secretary for Financial Services and the Treasury Christopher Hui Ching-yu; and Chairman of the Securities and Futures Commission of the HKSAR Tim Lui Tim-leung attend the launching ceremony of the cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area is held in Hong Kong on Sept 10, 2021. (PHOTO / HKSAR GOVT)
The Chinese mainland, Hong Kong and Macao launched the first mutual market access mechanism for individual investors, which finance experts say will facilitate the development and further opening-up of the nation.
On Friday, the online ceremony marking the launch of the cross-border Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area was held simultaneously on the mainland and in Hong Kong and Macao via webcast.
Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor, Macao Chief Executive Ho Iat-seng, Guangdong province Governor Ma Xingrui, People’s Bank of China Deputy Governor Pan Gongsheng, and Huang Liuquan, deputy director of the Hong Kong and Macao Affairs Office of the State Council, attended the online ceremony.
The Wealth Management Connect is a milestone in the financial development of the Greater Bay Area and an important measure that deepens and widens mutual access between the financial markets of the mainland and Hong Kong, which will further consolidate Hong Kong’s role as the international financial center of our country.
Carrie Lam Cheng Yuet-ngor, Hong Kong chief executive
The plan enables residents in Hong Kong, Macao, and nine cities in Guangdong to carry out cross-border investment in wealth management products offered by banks in the area. It is estimated that banks will introduce related services in October at the earliest.
“The Wealth Management Connect is a milestone in the financial development of the Greater Bay Area and an important measure that deepens and widens mutual access between the financial markets of the mainland and Hong Kong, which will further consolidate Hong Kong’s role as the international financial center of our country,” Lam said.
Under the plan, there will be an aggregate quota of 150 billion yuan (US$23.3 billion) in each direction and an individual investor quota of 1 million yuan. The plan will cover relatively simple investment products with low to medium risk, and clients will initiate transaction instructions, while banks will execute such instructions and respond to clients’ inquiries. Structured products or derivatives will not yet be included in the program.
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Participating Hong Kong and Macao investors must open a designated remittance account at an eligible bank of their choice in Hong Kong or Macao and a designated investment account with its mainland partner bank to invest in onshore financial products. Mainland customers must open a designated remittance account at an eligible bank of their choice on the mainland and a designated investment account with its Hong Kong or Macao partner bank to invest offshore. Both investment channels will be conducted with a closed-loop currency conversion regime.
Hong Kong Financial Secretary Paul Chan Mo-po lauded the system, saying: “The Wealth Management Connect will expand the cross-border investment channel and asset allocation choices for residents in the area, and opens up a broader market for the financial and relevant professional sectors, bringing enormous business opportunities.”
The city’s finance chief said that the Wealth Management Connect will also attract more international financial institutions that want to gain a foothold in Hong Kong to expand their mainland businesses. This will further reinforce Hong Kong’s role as an important gateway for capital flowing into and out of the mainland, as well as its position as the global offshore renminbi business hub and an international asset management center, he said.
Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority, the city’s banking industry regulator, said, “The plan will also create new opportunities for the banking and wealth management industry in the three places.”
Major banks in Hong Kong are flexing their muscles to grab a piece of the market pie. To strengthen its retail wealth management team, the Bank of East Asia plans to hire 300 sales employees across the Greater Bay Area in the coming three years. Hang Seng Bank (China) expects to launch up to 140 investment products to mainland customers that cover different asset classes such as funds, bonds, and deposit products in renminbi, Hong Kong dollars and overseas currencies. HSBC also plans to provide over 100 selected wealth management products in the initial phase.
Laurence Li, chairman of the Financial Services Development Council, welcomed the Wealth Management Connect, which he said underpins Hong Kong’s unique role in the liberalization process of the mainland’s financial system.
Private Wealth Management Association Chairman Amy Lo hailed the plan as “an important step toward realizing the potential of the Greater Bay Area to become a leading global hub of wealth creation and management.”
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Alexa Lam, Asia Pacific chief executive at ICI Global, the global association of regulated funds, said, “Hong Kong’s asset management industry is excited at the opening of what is effectively a brand-new market.
“I believe many will take advantage of this tremendous opportunity, which will help develop financial and investment services and talent and allow for easier movement of people and services within the Greater Bay Area.”
Following its third plenary meeting, held in November 2019, the Leading Group for the Development of the Guangdong-Hong Kong-Macao Greater Bay Area announced its support for the exploration of the establishment of a cross-border wealth management connect mechanism, in relation to the development of Greater Bay Area finance. In February, regulators of the three places announced that they have signed a memorandum of understanding on the principles of supervisory cooperation under Wealth Management Connect.