No launch date in sight for wealth management connect as it depends on resumption of cross-border travel, HKMA chief says
- Beijing requires all investors to be present in person when opening an investment account
- Cross-border travel restrictions caused insurance sales to mainland buyers to plummet 84 per cent last year
“As the travel restrictions remain in place, it would be hard to launch the wealth management connect at the moment as investors will need to cross the border to open a bank account,” said Eddie Yue Wai-man, chief executive of HKMA. “It is a national requirement for investors to open an investment account in person at financial firms to allow bank staff to explain the products and risks to the investors.”
The scheme, which will have an aggregate quota of 300 billion yuan (US$45 billion) for fund movement in both directions under the connect scheme, will allow each investor to invest up to 1 million yuan each.
Yue said that the HKMA was working with the mainland authorities to simplify the process, which would require just one cross-border travel to open a bank account. Usually opening an account requires a lot of documents and the process sometimes requires multiple visits to the bank.
Still, even if Beijing accepts the HKMA’s demand, few investors will do so under the current restrictions. Cross-border traffic has come to a standstill since March last year as a mainlander has to spend almost a month to finish two 14-day quarantine periods – one when they arrive in Hong Kong and another when they return home. Hong Kong and Macau residents face the same requirements.
“If we launch the wealth management connect when the cross-border travel restrictions are still in place, it will not work well,” Yue said. He, however, was confident of the scheme’s success when cross-border travel resumes.
Yue said the HKMA will work on the launch of the southbound segment of bond connect in the second half of this year to allow mainlanders to invest in Hong Kong’s bond market. The northbound link of bond connect was introduced in 2017 for international investors to participate in the mainland bond market.
The eight virtual banks that launched operations last year had a combined 420,000 customers and HK$15 billion (US$1.9 billion) of deposits, while the number of accounts using the HKMA faster payment system reached 7.5 million, Yue said.
“Connect schemes, fintech and green finance will be three major focus areas of the HKMA in the next few years,” he said.