China

China launches long-awaited Wealth Connect

China commnced it's long-awaited scheme, called Wealth Management Connect, that links Guangdong with Hong Kong and Macau, as Beijing moves to pull the two territories closer.

Reuters has reported that the cross-boundary scheme will initially bring combined fund flows of 300 billion yuan ($46.53 billion) in the three areas together known as the Greater Bay Area (GBA), the Hong Kong Monetary Authority (HKMA) said.

 

"The scheme will not only offer more investment options for individual GBA investors but also create new opportunities for the banking and wealth management industry in the three places," HKMA chief executive, Eddie Yue, said in a statement. It will also promote cross-border use of the Chinese currency, strengthening Hong Kong's role as the global hub for offshore yuan.".

 

Twenty Hong Kong banks have expressed interest in participating, said HKMA's deputy chief executive Edmond Lau.

"If the scheme proves popular we could increase the quotas so regulators will have a pragmatic approach," he told a media briefing.

"The WMC scheme is a key milestone in China's financial market liberalisation," said Elisa Ng, Hong Kong head of J.P. Morgan Asset Management, which has been preparing for the pilot program since it was announced in June last year.

Sebastian Paredes, chief executive of DBS Hong Kong, expects the region to provide a quarter of the customers in the bank's Hong Kong Treasures Wealth programme over the next three years.

"We see immense opportunities in expanding our business into China," he added.

Bank of China (Hong Kong) and the Private Wealth Management Association (PWMA) also welcomed the effort.

"We look forward to engaging with relevant authorities on how to expand the scheme’s scope in the future," Amy Lo, who chairs the executive panel of the Association, said in a statement.