The official launch of the cross-border Wealth Management Connect (WMC) in the Guangdong- Hong Kong- Macao Greater Bay Area at the end of the second week of September, as the People’s Bank of China and the Monetary Authority of Macao also promulgated the respective implementation details of the WMC applicable to the mainland and Macao.
WMC allows eligible mainland, Hong Kong and Macao residents in the Greater Bay Area (GBA) to invest in wealth management products distributed by banks in each other’s market, through a closed-loop funds flow channel established between their respective banking systems, the Hong Kong Monetary Authority (HKMA) said.
“The official launch of the cross-boundary WMC marks another encouraging development of financial cooperation in GBA. Individual investors in the three places will be able to make use of the convenient channel provided to invest in more diversified wealth management products across the boundary,” Eddie Yue, chief executive of the HKMA, said.
The quota for southbound and northbound schemes under WMC is set at CNY150bn (£16.8bn, $23.2bn, €19.5bn) each. Individual investors can invest up to CNY1m in investment products under WMC, according to HKMA.
“The scheme will not only offer more investment options for individual GBA investors, but also create new opportunities for the banking and wealth management industry in the three places. In addition, it will promote the cross-boundary circulation and use of the renminbi, thereby further consolidating Hong Kong’s role as the global hub for offshore renminbi,” Yue added.
‘Hub of wealth creation and management’
The WMC pilot scheme is an important step towards fulfilling Hong Kong’s unique potential as the pre-eminent wealth management hub in Asia, said the Private Wealth Management Association (PWMA).
“The launch of this new scheme will widen the scope of investment opportunities available to clients of the GBA, and is an important step toward realising the potential of the GBA to become a leading global hub of wealth creation and management,” Amy Lo, chairman and executive committee of PWMA, said.
According to HSBC, meanwhile, the range of eligible products and distribution channels stipulated in the rules reflect a pragmatic approach, taking into consideration the market environment and investors’ needs.
Products allowed under both the “northbound” and “southbound” scheme will be of low-to-medium risk to ensure a smooth start, David Liao, co-chief executive of The Hongkong and Shanghai Banking Corporation Limited, 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 GBA,” added Alexa Lam, chief executive of Asia-Pacific at Investment Company Institute Global.
“Importantly, investors from other parts of the GBA who come to Hong Kong are eligible for investment and suitability advice – an important pillar of investor protection under Hong Kong law. These measures will give asset and wealth managers freedom to design and sell products suited to the needs of investors in the GBA. More importantly, they give investors easier access to financial services professionals, products and services – and better protections,” she explained.
From JP Morgan Asset Management’s perspective, it has been actively preparing for the WMC scheme since the announcement of the pilot programme in June 2020, working closely with bank partners on product development and distribution plans, Elisa Ng, head of the Hong Kong business, said in a statement.
Additionally, Sebastian Paredes, chief executive of DBS Hong Kong, underscored the significance of the launch of the WMC: “We see immense opportunities in expanding our business into China, anticipating a quarter of our HK Treasures Wealth customers will come from GBA in the next three years.”
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