China, Hong Kong and Macau have outlined details of a plan for a cross-border channel to allow wealth management products to be distributed by banks within the Greater Bay Area, one of the largest banking clusters in the world.
The Greater Bay Area is a masterplan to develop Hong Kong, Macau, and nine cities in southern Guangdong province into an integrated technology, business and finance hub by 2030.
The new Wealth Management Connect will allow residents in the area to buy wealth management products offered in each other’s markets by opening designated investment accounts, the central banks of China, Hong Kong and Macau say in a joint statement on June 29.
The plan was first announced last year and the statement says the date of the official launch has not been finalised yet.
According to the central banks, the scheme “is conducive to the creation of a quality living environment within the Greater Bay Area and promotes the opening-up of the Mainland’s financial markets as well as the mutual social and economic development” of China, Hong Kong and Macau.
They say there will be combined and individual investor quotas that will be adjusted “through a macro-prudential coefficient”.
Hong Kong Monetary Authority Chief Executive Eddie Yue describes it as a “major breakthrough” for the development of Chinese currency business in the city, and a “significant step to foster closer financial cooperation in the Greater Bay Area”.
“The financial sector has been looking forward to the launch of the scheme to better serve the growing demand for cross-boundary wealth management and investment services by GBA residents,” he says in a separate statement.
The scheme is “good news” for Greater Bay Area investors looking to expand investment opportunities, Greg Hingston, regional head of wealth and personal banking for Asia Pacific at Hong Kong and Shanghai Banking Corporation (HSBC), tells Asia Asset Management.
According to Mr. Hingston, the Greater Bay Area is not only the wealthiest urban cluster in China but one of the world’s largest banking clusters with banking revenues expected to expand at a compound annual growth rate of 10.3% over five years to reach US$185 billion by 2025.
He says HSBC’s “comprehensive wealth management solutions will help customers in the Greater Bay Area to take advantage of the opportunities”.
The Wealth Management Connect will be the third cross-border scheme between China and Hong Kong after the introduction of stock and bond channels in recent years.