After over a year of anticipation, the long-awaited Wealth Management Connect Scheme was launched in September 2021, marking the first mutual market access mechanism for individual investors in Hong Kong. The growth and gradual opening-up of one of the wealthiest regions in China offers a multi-billion-dollar opportunity. The scheme enables residents in mainland China, Hong Kong and Macau to carry out cross-boundary investment in wealth management products distributed by banks through a closed-loop fund flow channel. Eligible banks such as HSBC, Standard Chartered and Bank of China have started offering services under the Wealth Management Connect Scheme.
The scheme has a Southbound and a Northbound component, depending on the investors’ residency and comes with different restrictions. Each investor in Hong Kong, which is under the Northbound component, can only trade up to 1 million yuan (US$155,000) on a net remittance basis through banks in the development zone and can only invest in low and medium-risk fund products.
This not only offers more investment options for investors but is creating new opportunities for the wealth management industry. Non-APAC wealth managers working in Securities and Futures Ordinance licensed banks in Hong Kong also have a chance to seize new investment opportunities. On the first day of trading of the new connect scheme, banks received positive responses from customers, with many of them buying products across the boundaries. As such, it has further strengthened Hong Kong’s role as a global wealth management hub and a gateway to mainland China.
For wealth managers and private banks offering services to High and Ultra-High Net Worth (HNW and UHNW) customers this means their public relations efforts need to ensure they are tailoring messages that can appeal to customer groups within and crossing over the three different centres that these reforms involve.