Hong Kong’s financial services industry and foreign asset managers are welcoming the long-awaited official launch of a wealth management channel in the Greater Bay Area that opens up opportunities to tap roughly half trillion dollars of assets, with one market player describing it as a “milestone” in China’s market liberalisation.
The central banks of China, Hong Kong and Macau announced details, including the account opening process, for the Wealth Management Connect on September 10, more than a year after the scheme was unveiled in June 2020.
Among other things, participating Hong Kong lenders are allowed to partner with more than one bank in China to provide cross-border services such as remittance and distribution of wealth management products. Lenders are also barred from selling high-risk funds such as structured products or derivatives in the initial stages.
“The Wealth Management Connect is a key milestone in China’s financial market liberalisation, encouraging capital flows and investment within the Greater Bay Area and enabling investor diversification,” Elisa Ng, head of Hong Kong at J.P. Morgan Asset Management, tells Asia Asset Management.
The company currently offers 30 Hong Kong-domiciled retail funds, including money market, bond and multi-asset funds, and Ng expects some of them to qualify for distribution in the Greater Bay Area.
Laurence Li, chairman of Hong Kong’s Financial Services Development Council, an agency that promotes the city’s financial services industry, predicts the wealth channel will help Chinese investors diversify their investment portfolios and manage risk, and encourage development of more wealth management products in China.
“In turn, it will also allow investors in Hong Kong to gain further exposure to and knowledge of the Mainland financial marketplace,” Li says in a statement on September 10.
The Greater Bay Area comprises Hong Kong, Macau, and nine cities in China’s southern Guangdong province, and has a combined population of over 70 million – roughly ten times that of Hong Kong and 12 times that of Singapore – holding roughly 3 trillion RMB (US$462 billion) of investable assets.
Beijing plans to develop the area into an integrated technology, business and finance hub by 2030.