Hong Kong Cross-Border Wealth Scheme Delayed by Pandemic
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Banks looking to capitalize on wealth management opportunities from the Greater Bay Area will have to wait until travel bans are lifted, according to the Hong Kong Monetary Authority.
HKMA chief executive Eddie Yue said that the existing travel bans make it difficult to launch the ‘Wealth Management Connect’ scheme – a cross-border channel that will allow mainland residents of the 11-city cluster to invest in Hong Kong and Macau-based wealth management products.
Under the current rules, investors seeking such products must physically open an investment account in person for the financial firm to share relevant information and risks.
The overall scheme allows an individual investor quota of 1 million yuan ($150,000) each and an aggregate quota of 300 billion yuan (US$45 billion) for north and southbound fund movements.
While it remains to be seen when travel restrictions will be removed – Hong Kong recently recorded another wave of coronavirus cases that led multiple banks to advise employees to work from home – HKMA is actively working with Beijing to simply the process for cross-border account opening.
According to Yue, a simpler process could be introduced which would require only one-time cross-border travel, compared to the current practice which requires a plethora of documents and often multiple visits.
Other cross-border initiatives that the HKMA is focused on include the southbound segment of the bond connect scheme which is planned for a launch in the second half of 2020 after the northbound segment was introduced in 2017. Unlike the wealth management connect scheme, cross-border trading does not require physical travel.
Questions & Answers
Q.What is the primary reason for the delay in launching the Wealth Management Connect scheme?
What is the primary reason for the delay in launching the Wealth Management Connect scheme?
The Hong Kong Monetary Authority states that existing travel bans, making it difficult to physically open investment accounts, are preventing the launch of the Wealth Management Connect scheme.
Q.What is the individual investment limit for mainland residents under the Wealth Management Connect scheme?
What is the individual investment limit for mainland residents under the Wealth Management Connect scheme?
Under the scheme, individual investors from the mainland will be allowed to invest up to 1 million yuan, which is equivalent to 150,000 US dollars, in Hong Kong and Macau-based products.
Q.How is the HKMA trying to overcome the challenges posed by travel restrictions for account opening?
How is the HKMA trying to overcome the challenges posed by travel restrictions for account opening?
The HKMA is actively collaborating with Beijing to streamline the process for cross-border account opening. A simpler process requiring only one cross-border trip, rather than multiple visits, is being considered.
Q.Are there other cross-border financial initiatives that the HKMA is currently focused on?
Are there other cross-border financial initiatives that the HKMA is currently focused on?
Yes, the HKMA is also concentrating on the southbound segment of the bond connect scheme. This initiative was planned for launch in the second half of 2020.