Fund Management

More Banks Jump Aboard Wealth Connect

Tom Burroughes, Group Editor, 20 October 2021

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The cross-border wealth and investments programme in some ways mirrors the schemes set up in places such as the European Union, where funds and products are "passported." This fits into a general picture of Beijing pushing to liberalise its capital markets.

A number of major banks yesterday said that they were launching services using the new Wealth Management Connect regime, which binds financial markets together in mainland China, Hong Kong and Macao – the Greater Bay Area. Already, several lenders have announced their involvement.

Standard Chartered, Citigroup, DBS Bank (Hong Kong), Postal Savings Bank of China Co and China Guangfa Bank were among the latest lenders to say that they were unveiling service offerings.

Standard Chartered, for example, said that eligible individual investors in the Greater Bay Area (GBA) can participate in the regime. For the “Northbound” side of the programme, those who already hold an existing investment account with Standard Chartered China can, through Standard Chartered Hong Kong, designate the account as the dedicated investment account under the Northbound Scheme. Or, other Hong Kong clients can complete an account opening form in advance through Standard Chartered Hong Kong and visit a branch of Standard Chartered China in the GBA later to set up a dedicated investment account. 

For the “Southbound” side of the scheme, GBA mainland clients can set up a dedicated investment account with Standard Chartered Hong Kong by attestation through Standard Chartered China. When the account opening is completed, GBA mainland clients can buy Standard Chartered Hong Kong’s wealth management products dedicated for the Southbound Scheme, such as deposits, foreign currencies and funds.

As reported earlier, HSBC and several other banks have joined the Connect programme. The scheme will initially lead to combined fund flows of RMB300 billion ($46.53 billion) in the Greater Bay Area, the Hong Kong Monetary Authority has said (source: Reuters, 10 September).  

Yesterday, Citigroup announced a strategic partnership with China Guangfa Bank to offer cross-border wealth services. 

The development of this programme is similar to the Stock Exchange schemes arranged between Hong Kong and the mainland which were launched a few years ago in a bid to boost local equity markets. It also follows the Hong Kong/China Mutual Recognition scheme that came into force in 2015.

The move comes at a time when Beijing has been liberalising its capital markets to encourage foreign investment inflows. There are also parallels with other regions’ moves to integrate financial markets. For example, the European Union’s UCITS regime for funds enables investors to buy and sell funds across the EU without having to register them separately in each jurisdiction. (The UK’s departure from the EU has, however, created additional steps that UK-based fund managers must take to tap into the market.) 

As for the US, the country benefits from a large, integrated funds and investments market – a fact long envied in regions such as Europe.

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