Shake-up to benefit Greater Bay Area
- Tweaking of Wealth Management Connect scheme aims to encourage more investment to help turn development zone into economic powerhouse
It is more than two years since the Wealth Management Connect scheme, which allows individuals to tap cross-border investment funds in yuan and Hong Kong dollars, was launched with great fanfare alongside the stock and bond connect schemes introduced in 2014 and 2017, respectively. What set it apart from the beginning was that it is focused solely on the Greater Bay Area, unlike the other two that were rolled out nationally.
But, since then, compared with the thriving northbound and southbound connect schemes for stocks and bonds, authorities have noted its massive underachievement.
As of April, only 50,000 investors had taken up the scheme through approved banks on both sides of the border, with 3.4 billion yuan (HK$3.7 billion) of investments. That was a mere 1 per cent of the 300 billion yuan quota set in 2021.
Such low take-up, despite a pickup since the border reopened, is attributed partly to the narrow range of available products and sales channels, prompting Hong Kong and mainland authorities to consider a number of measures to enhance choice and accessibility.
Wealth Management Connect scheme to increase eligibility, product range, limits
As a result, the Monetary Authority and the Securities and Futures Commission have announced tweaks to the scheme agreed with cross-border authorities that expand products, lower investor thresholds and simplify buying procedures.
They include widening the scope of participating institutions to include eligible securities firms, allowing them to distribute investment products and provide relevant services to southbound and northbound individual investors. Promotion and sales arrangements will also be further enhanced when it comes to quality financial services for Greater Bay Area residents.
The Monetary Authority says financial regulators on both sides of the border will implement these measures to streamline and expand the scheme as soon as possible.
The scheme is important for the development of the bay area to encourage capital flows and investment among its 11 cities, including Hong Kong and Macau, and help turn the zone into an economic powerhouse in its own right.
