Caixin
Oct 19, 2021 08:14 PM
FINANCE

Update: First Batch of Banks Begin Cross-Border Wealth Management Connect Services

Sunset in the Guangdong-Hong Kong-Macao Greater Bay Area on Aug. 17. Photo: VCG
Sunset in the Guangdong-Hong Kong-Macao Greater Bay Area on Aug. 17. Photo: VCG

The first batch of banks began providing services under the wealth management connect (WMC) trial program on Tuesday morning, allowing certain residents on the Chinese mainland, Hong Kong and Macao to make cross-border investments.

On Tuesday, retail investors in the two special administrative regions invested 15.4 million yuan ($2.4 million) in mainland wealth management products, and 17.7 million yuan of mainland investment went the other way, according to a statement (link in Chinese) from the Guangzhou branch of the central bank.

Government officials and bankers generally estimate the WMC program will create new business opportunities for financial industries in the region, broaden investment access for local residents, and boost the cross-boundary use of the yuan.

The WMC program allows qualified mainland residents of the nine Guangdong cities in the Greater Bay Area (GBA) — which also includes Hong Kong and Macao — to invest in certain products sold by banks in the two regions via the “southbound” link. The “northbound” link is the inverse. In China, mainland investment in Hong Kong and Macao and vice versa is regarded as cross-border investment. Transactions under the program are settled in the yuan via the Cross-Border Interbank Payment System.

In the initial stage, the only eligible products are those regarded as being of low or medium risk such as bonds, mutual funds and deposits. Mainland investors have to meet some requirements regarding their assets and investment experience.

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Five Things to Know About the New Cross-Border Wealth Connect Program

In Shenzhen, local branches of 20 banks can participate in the WMC program, 16 of which can provide both northbound and southbound services, said a statement (link in Chinese) from the central bank’s local branch. The other four are only allowed to provide southbound services.

In Guangzhou, capital of Guangdong province, 20 banks are allowed to provide services under the program, the city’s central bank branch said (link in Chinese).

Likewise, Hong Kong and Macao have also unveiled lists of banks who can participate in the program.

More banks are expected to be approved to participate in the program in the future. The HKMA will continue to process applications and update the list of eligible banks, according to a Monday statement.

Regulators set an initial total quota of 150 billion yuan for both the northbound and southbound links, while the cap on each individual’s investment is set at 1 million yuan.

Standard Chartered PLC’s GBA business CEO Anthony Lin said the company expects the trial program to gradually expand over time, along with a higher investment cap and broader categories of investment products.

Tang Ziyi contributed to this report.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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