Wealth Connect Scheme Widens; HSBC Sees Flows Expanding

Editorial Staff

27 February 2024

A survey by of more than 2,000 residents in the Greater Bay Area finds that about two-thirds of them think liberalised Wealth Management Connect rules will boost their existing investments, or encourage them to enter for the first time.

The Connect system, linking the financial markets of mainland China, Hong Kong and Macao more tightly than before, was originally started in 2021. Policymakers have adjusted rules such as entry thresholds and investment quotas to boost flows. New rules kicked in from yesterday.

All existing and new WMC customers can invest up to RMB3 million ($416,000) through the scheme; an increase of RMB1 million previously, HSBC said in a statement.

“The latest enhancement to the WMC has further increased the attractiveness of the scheme, fuelling investments and promoting even deeper integration of the financial sector in the GBA,” Daniel Chan (pictured), head of the Greater Bay Area, HSBC, said in a statement. “In addition to opening the door to greater market opportunities, investment channels and diversified investments, survey respondents have emphasised that wealth planning and advisory services are key factors for their increased participation in the scheme.”

Mainland China and its counterparts want to tap wealth of a rising affluent middle class in the region. To an extent, the scheme also highlights how Hong Kong is being more tightly integrated into China as a whole. Separately, Hong Kong, which endured severe pandemic lockdowns, as well as geopolitical concerns about its jurisdictional autonomy, is looking to regain its former lustre as a wealth hub.

HSBC in Hong Kong said it is expanding its team of financial advisors using Wealth Portfolio Intelligence Service, a portfolio analytic available to Premier Elite and Premier customers, to provide advisory service to Southbound investors.

Respondents to the HSBC survey said that on average, they allocate about RMB710,000 to Connect and they expect a 7.7 per cent annual return from their investments. Energy, technology, natural resources, biotechnology and finance rank among the most preferred sectors for investment.

A large majority (81 per cent) of Southbound respondents expressed a need for cross-border investment advisory assistance from a bank’s financial advisors.