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China sets limits in plan to ease capital controls in Greater Bay Area under cross-border wealth management scheme

  • Each investor can only invest up to 1 million yuan worth of investment products under the new scheme
  • The Wealth Management Connect would take an incremental approach, with possibilities for enhancements: HKMA

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Cross-border investment scheme gives Hong Kong yet another critical advantage over other financial hubs in tapping China’s fast-growing wealth and market opening. Photo: EPA-EFE
Enoch Yiu
China is moving a step closer to easing capital controls within the Greater Bay Area by setting the amount of fund flows allowed under an investment scheme with Hong Kong and Macau from early next year.

Authorities on both sides of the borders have set an aggregated quota of 300 billion yuan (US$45 billion) in fund movements in both directions between the nine cities in southern Guangdong province and the two special administrative regions.

Beijing, Hong Kong and Macau have also limited individual investors to 1 million yuan worth of investment products they can each purchase under the scheme, known as Wealth Management Connect, a Hong Kong Monetary Authority spokesman said.

The newest Connect scheme, an extension to the popular stock and bond programmes, first unveiled in June without an explicit timetable, will give more than 70 million residents in the bay area access to investment products to strengthen the financial bond in the region.
General view of Shenzhen in the Greater Bay Area, the richest of nine cities in southern Guangdong province. Photo: Martin Chan
General view of Shenzhen in the Greater Bay Area, the richest of nine cities in southern Guangdong province. Photo: Martin Chan

The aggregate quota and investment limits were decided after several months of consultation with market participants, the HKMA spokesman said in reply to a query from the Post on Thursday. The scheme is expected to kick off early next year.

“Like other connect schemes, we envisage the Wealth Management Connect would take an incremental approach, starting with a smooth launch, with possibilities for enhancements down the road,” he said. “Therefore, regulatory authorities aim to be pragmatic and prudent in the design of the scheme features, with proper risk controls.”

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