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Greater Bay Area: HSBC, Standard Chartered increase Wealth Management Connect products amid drive to promote cross-border investment

Banks in Hong Kong including HSBC and Standard Chartered Bank are rolling out more products tied to the Wealth Management Connect scheme amid a drive by Beijing to boost the Greater Bay Area's financial markets and promote capital flow across borders.

Their moves come a month after the People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) announced six measures to strengthen financial cooperation between the mainland and Hong Kong.

One of those was to enhance the cross-boundary Wealth Management Connect scheme in the bay area development zone.

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Launched in 2021, the mechanism allows residents of Hong Kong, Macau and nine cities in Guangdong province to invest directly in designated wealth management products across borders.

New rules took effect on February 26 raising the individual investment quota from 1 million yuan (US$138,923) to 3 million yuan and adding yuan-denominated deposit products of mainland banks - moves viewed by lenders as creating more business opportunities.

HSBC announced on Monday that it has increased the number of products it offers for both northbound and southbound investments via the scheme to over 400 from 270.

The expanded product offerings include more than 100 mutual funds investing in Asia and global markets, allowing southbound investors - those in mainland China eyeing Hong Kong's capital markets - to diversify their portfolios and tap international assets.

The lender's enhancements, effective from Monday, allow all existing retail investors to invest up to 3 million yuan through the scheme, up from 1 million previously, the bank said in a press release.

"The latest enhancement to the [Wealth Management Connect mechanism] has further increased the attractiveness of the scheme, fuelling investments and promoting even deeper integration of the financial sector in the GBA," said Daniel Chan, head of the Greater Bay Area at HSBC.

A recent survey conducted by the lender found that roughly two-thirds of over 2,000 residents in the 11 cities of the bay area believed improvements to the cross-border scheme, including a relaxed entry threshold, more diverse investment options, and the higher individual investment quota, will encourage them to start investing via the scheme or up their existing investments.

Chan said wealth planning and advisory services are key factors in driving retail participation in the scheme.

Hang Seng Bank, a subsidiary of HSBC, announced on the same day that it too will widen its wealth management product offerings tied to cross-boundary investment, offering about 320 southbound and northbound investment options. That is roughly double the number available at the scheme's inception in 2021, the lender said in a statement.

"The enhancements to the Wealth Management Connect scheme open up new avenues for growth in the wealth management sector," said Rannie Lee, head of wealth and personal banking at Hang Seng Bank.

Standard Chartered joined the fray on Monday too, announcing it will expand its product offerings via the scheme, allowing southbound investors to choose from close to 550 products, including medium- to high-risk equity funds in China and low- to medium-risk bonds.

Northbound investors - those living in Hong Kong eyeing the mainland's capital markets - will have access to more yuan deposit products, as well as over 40 mutual fund products covering sectors including consumption, energy, infrastructure and manufacturing, the bank said.

The bay area, with a population of over 86 million and gross domestic product in excess of 13 trillion yuan (US$1.8 trillion) as of 2022, accounts for more than 10 per cent of China's economic output. It is a core part of the country's economic blue print, with Beijing planning to turn the region into a hi-tech, economic powerhouse by 2035.

By the end of 2023, 67 banks and 69,000 investors in the bay area had joined the Wealth Management Connect scheme, with cross-boundary remittances amounting to 12.8 billion yuan, according to official data.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.