Greater Bay Area opens door to new opportunities for Hong Kong investors
- Growing number of cross-border financial services will allow investors to diversify portfolios under the GBA Wealth Management Connect scheme
- HSBC is smoothing the way for Hong Kong-based investors looking to gain access to the rapidly expanding GBA market
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For Hong Kong residents looking to expand their wealth management portfolios, the rapidly developing Greater Bay Area (GBA) now offers a range of new investment opportunities. Thanks to a pilot scheme connecting capital markets in the area, Hong Kong retail investors can for the first time open and operate cross-boundary investment accounts directly within one of the world’s most dynamic economic regions.
Launched in October last year, the Wealth Management Connect (WMC) scheme is the first two-way investment mechanism for retail investors in the GBA, and was jointly implemented by the financial regulators of Hong Kong, Macau and the mainland. The scheme permits eligible banks to facilitate cross-border investment by offering a range of wealth management products to GBA residents.
Wealth Management Connect to drive cross-border investment
With a population of more than 86 million and a combined GDP of US$1.6 billion – equivalent to 12 per cent of China’s total GDP – the GBA is set to play an important role in China’s future development plans.
The region is already home to many of the world’s leading corporations. According to a 2021 report by the World Economic Forum (WEF) in collaboration with international management consultancy Oliver Wyman, in 2020 more than 20 companies on the Fortune Global 500 had headquarters in the GBA. The region is also home to the headquarters of almost 100 financial institutions – banks, securities and insurance – that between them employ just under 13 per cent of financial services talent nationwide.
The WMC scheme will build on this, with the aim of establishing the GBA as an international financial hub through the promotion of cross-border trading and the diversification of investment products and channels. The scheme has already demonstrated the capability to move to a broader variety of products and cater to wider investment choices by providing more convenient retail customer access to northbound and southbound wealth management products in Hong Kong and on the mainland.
Investors in the GBA expect diverse products and risk diversification
The growing number of cross-border investment opportunities in the GBA also reflects changing customer needs and behaviours among investors. According to the WEF report, which surveyed northbound and southbound investors, 70 per cent of the region’s wealthy individuals have expressed strong interest in benefiting from WMC and other investment schemes – and increasing their investments in cross-border financial products as they become available.
Of those surveyed, almost 90 per cent said they plan to invest more overseas, their primary goal being risk diversification. But while almost 90 per cent of respondents have experience investing in stocks, the same proportion said they were unfamiliar with foreign financial products.
The survey also found that product diversity, effective investment recommendations and costs are the key drivers for investors. Southbound investors showed a clear preference for offshore products and global asset investments. For Hong Kong investors in particular, responsiveness and customised service are major criteria. This segment also shows a preference for partnering with Hong Kong local advisers for cross-border investment.
This is where wealth management support will be key. The WEF report found that those banks with strong onshore and offshore branches in the GBA will enjoy an advantage. That is because they can support the required operations by enabling cross-border account opening, vetting and transactions, complying with regulatory requirements, and building centralised and integrated operations.
Participating in Wealth Management Connect investment in Hong Kong
As one of the first banks to launch services under the WMC pilot scheme, HSBC is now providing Hong Kong customers with the support and expertise needed to fully realise these new investment opportunities. Leveraging on its standing as the largest international bank in the GBA, as well as being Hong Kong’s leading wealth manager, the lender is well positioned as a wealth management partner for Hong Kong investors.
HSBC Hong Kong has partnered with HSBC China to provide its GBA Wealth Connect service, allowing Hong Kong customers the opportunity to make cross-boundary investments. Customers that already have an HSBC China bank account in cities within the GBA region can directly apply for WMC northbound services through the HSBC China mobile app, offering them an easy route to begin investing in the region – especially convenient given the current travel restrictions.
Currently, Hong Kong-based investors can access Local Unit Trusts, distributed by HSBC China, which include selected products ranging from bonds to balanced funds and money market funds. HSBC will not charge remittance fees under HSBC GBA Wealth Connect for money transfers between accounts in mainland China and Hong Kong via mobile and online banking. The fee-free service is part of the bank’s enhanced digital cross-border banking capabilities for its customers.
Digital capabilities that offer customers convenient access to northbound financial products are a key feature of the HSBC GBA Wealth Connect service. Customers can invest in a range of products and manage their portfolio 24 hours a day with just a few clicks online or a few taps on the bank’s mobile app, where they can also receive timely and distinctive market insights.
To support potential investors, the bank has already set up some 60 GBA Wealth Management Connect Centres in existing GBA retail outlets, Hong Kong included, where dedicated staff will help customers with account opening and enquiries related to the WMC scheme.
As the GBA continues to grow and investment opportunities increase, HSBC’s GBA Wealth Connect service will provide customers with the trust, convenience and market insight that will allow them to capitalise on these opportunities and ultimately diversify their portfolios throughout the region.
Investment involves risk. Terms and conditions apply.