China and Hong Kong - Expansion of Greater Bay Area Wealth Management Connect Scheme to Boost Investment Options

The Greater Bay Area (GBA) Wealth Management Connect (WMC) scheme is set for an expansion that promises to open up new avenues for investors and financial products. Announced in a joint statement by regulators from Hong Kong, China, and Macao on September 28th, the move aims to enhance the accessibility and scope of the cross-boundary investment initiative.

Under the new developments, the Hong Kong Monetary Authority (HKMA) will relax restrictions on eligible participants, allowing "eligible securities firms" to market their offerings to both northbound and southbound investors. This decision is expected to significantly increase the pool of financial institutions participating in the scheme.

Furthermore, the eligibility requirements for individual investors will be eased, and the individual investor quota will see an increase. While the specifics of these changes have not been detailed, they are anticipated to make the Wealth Management Connect scheme more accessible to a broader range of residents and investors.

The scheme, which was initially launched in 2021, has been steadily gaining momentum as a reliable means for cross-border asset diversification. HSBC, one of the prominent players in the financial sector, has welcomed these developments, recognizing the potential benefits they bring to the GBA investment landscape.

Daniel Chan, the head of the Greater Bay Area at HSBC, expressed optimism about the future of the Wealth Management Connect scheme: "We believe that by continuing to refine the eligibility criteria of investors, enhance promotion and sales arrangements, expand product types, and increase the individual investor quota, the WMC will provide investors in the GBA greater convenience, choices, and flexibility to participate in cross-boundary investments, which are key to driving participation in the long run."

Currently, the Wealth Management Connect scheme offers access to low to medium risk financial products classified as non-complex. These products include bonds, deposits, and regulated funds. The aggregate quota for both the northbound and southbound schemes stands at RMB 150 billion ($20.5 billion), with individual investors having an allocation of RMB 1 million.

The joint statement issued by the GBA's regulatory authorities highlighted their commitment to revising and refining implementation details and operational guidance swiftly to put the proposed measures into effect as soon as practicable. This expansion of the GBA Wealth Management Connect scheme is expected to provide investors in the Greater Bay Area with greater opportunities, choices, and flexibility for participating in cross-boundary investments, ultimately driving increased participation in the initiative.