Anita Fung, chief executive officer of HSBC Hong Kong tells WealthBriefingAsia why the wealthy NRC segment will be pivotal in Hong Kong’s ambitions to become a global financial hub.

Non-Resident Chinese (NRC), primarily from the mainland, are turning to Hong Kong’s financial services sector in greater numbers. Here Anita Fung, the newly-appointed chief executive officer of HSBC Hong Kong tells WealthBriefingAsia exclusively why the wealthy NRC segment will be pivotal in Hong Kong’s ambitions to become a global financial hub.

Viewed from whichever angle, Hong Kong is the logical destination for the developing financial needs of NRCs. At its foundation is a depth of local and global talent and abroad financial infrastructure capable of supporting the NRC customers. Furthermore, China’s recently-announced twelfth Five-Year Plan will reinforces Hong Kong’s leadership within the NRC segment with pledged support for the financial services industry.

As a result of these factors, HSBC did a survey on Hong Kong’s NRC wealth management market. The survey’s findings point to the emergence of a new generation of NRC customers focused on end-to-end investment solutions.

According to HSBC’s research, approximately 58 per cent of NRCs surveyed hold Hong Kong-listed stocks. The growing sophistication of NRC customers extends to fund management, with about a fifth now investing in these products.

Significantly, the NRC wealth management push also extends to investment-linked insurance solutions and insurance products with savings components. We expect this trend will further evolve as understanding of insurance products develops further. We also see rapidly developing interest with structured products, showing a clear jump in NRC investor behaviour.

As more customers emerge and affluence grows, Hong Kong’s regulatory framework is well-placed to support the NRC wealth management business. As one of the most robust regulatory environments for wealth management, several pieces of post-global financial crisis legislation have been introduced by the Hong Kong Securities and Futures Commission (SFC) to create a more transparent industry aimed at a broader customer base.

Recently, the SFC Products Handbook established new rules for regulating wealth management products available in Hong Kong to NRC customers. Foremost, these new principles relate directly to the cross-sale and promotion of wealth management products to ensure fair disclosure, assets protection, regulatory compliance and product diligence.

Issuers of structured products are now also required to provide customers with cooling-off rights and selected unlisted structured products can be unwound to provide investors the opportunity to exit.

Changes to the SFC’s Code of Conduct also provide a more level platform for the sale of products and financial instruments to NRC customers. New investor clarification requirements within the Code serves to protect a new generation of market participants from risks associated with complicated investment products.

Additionally, new regulations have allowed more institutions – securities firms, asset management companies and insurance firms – to open RMB bank accounts. Restrictions were also lifted on RMB interbank transfers between personal accounts and corporate accounts that will help the RMB wealth management industry offer further alternatives to NRCs.

While Hong Kong’s RMB wealth management industry is still at an early stage of development, demand for RMB-denominated bond funds and insurance products has been extremely encouraging. As the nascent RMB IPO market matures, we expect a new generation of funds to emerge, and substantial demand from NRCs. 

With Hong Kong’s wealth management industry ideally placed to service the financial requirements of Greater China’s affluent consumers and their increasing sophistication, the Territory’s prestige will only grow. Hence, Hong Kong will add another layer to its ongoing emergence as the global financial centre for Greater China.