Hong Kong well-placed to create synergy in the GBA
Hong Kong is set to perform its pivotal role in driving interconnectivity and boosting cross-border financial services in the Greater Bay Area, creating a new situation of win-win cooperation.
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As the much-anticipated Wealth Management Connect scheme is expected to launch soon, Hong Kong’s financial sector is getting ready to tap into new business opportunities that emerge from the scheme. Regulators released the draft rules in early May, bringing the cross-border investment scheme a step closer to realization.
The scheme, the first cross-border investment program in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), is a move to further open up the Mainland’s financial market, promote economic integration in the GBA and reinforce Hong Kong’s role as China’s leading offshore renminbi (RMB) market.
Over the past decades, Hong Kong has served as a two-way gateway connecting the Mainland and international markets. The city was the first offshore market to launch RMB business in 2004 and has since become the global hub for RMB trade settlement, financing and asset management.
As it is of strategic importance to promote financial cooperation in the GBA1, with the “One Country, Two Systems” principle, intact financial infrastructure, Hong Kong is well positioned to enhance regional interconnectivity and promote synergy in the GBA.
“Hong Kong could strengthen its position as a global center for offshore RMB businesses, bolstering connectivity of regional financial markets and infrastructure,” says Jack Chan, Chairman, China, Regional Managing Partner, Greater China, EY. “The soon to be launched Southbound Trading for Bond Connect will also give mainland investors easy access to foreign bonds in Hong Kong, boosting liquidity in the city and further capitalizing on the synergy and acting as an investment gateway for the GBA.”
As the GBA develops by leveraging the diverse strengths of its constituent cities in technology and innovation, finance, shipping and trade, advanced manufacturing and hospitality, it will also create a supply chain of ideas, resources and talent within the region2.
The recent announcement of a joint working group to help implement the 14th Five-Year Plan (FYP) by boosting Hong Kong’s status as an international financial center3 has also given the city unprecedented opportunities. One of which is to support talent integration into the high-quality development of the GBA.
Hong Kong could leverage its comparative advantage in fundamental research, the international ranking of its universities, the recognition of its scientific research, feeding to the demand for both financial and technology talent in the GBA.
Agnes Chan, Managing Partner, Hong Kong and Macau, EY, says, “Given Hong Kong's strengths as an international capital market and financial center, coupled with Shenzhen's capabilities in developing leading-edge innovations and technologies, the GBA is set to break new grounds in enterprise research and development, talent pool and technology ecosystem.”
1. Implementation Plan for Providing Effective Financial Support for the Guangdong-Hong Kong-Macao Greater Bay Area – Analysis and Implications, EY, 2020.
2. Strategy for a tech-driven Greater Bay Area, www.ey.com/en_cn/china-opportunities/strategy-for-a-tech-driven-greater…
3. www.caixinglobal.com/2021-06-24/caixin-summit-hong-kong-to-complement-c…
