Regulators press ahead with Wealth Connect
Chinese investors secure nod to open southbound investment accounts onshore
10 Jun 2021 | Janette Chen

Regulators have given the green light for mainland Chinese investors to open cross-border accounts onshore in preparation for the launch of the Wealth Management Connect in the Greater Bay Area (GBA).

Pan Gongsheng, head of the State Administration of Foreign Exchange (SAFE), discussed the latest initiatives to further open up the country’s financial markets at the 13th Lujiazui Forum on June 10. He mentioned the plan to launch pilot programmes for the southbound Wealth Connect as one of the key projects.

Wealth Connect, which enables cross-border investments for individuals in the GBA, is part of efforts to expand the overseas asset allocation of Chinese residents, Pan says. In addition, regulators also aim to expand the Qualified Domestic Institutional Investor (QDII) scheme by increasing the assets under this programme.

According to Hong Kong regulators, qualified mainland investors can now open Hong Kong bank accounts attested to by banks in the mainland cities of the GBA for the Wealth Connect scheme, enabling the investors to open cross-border accounts onshore. This will be implemented among banks first and likely to expanded to other sectors such as securities firms later.

Hong Kong’s Securities and Futures Commission (SFC) says it is working closely with the Hong Kong Monetary Authority and mainland regulators for the launch of Wealth Connect, and the preparations are now in the final stages.

The SFC also advises Hong Kong banks to enhance their online distribution and marketing channels, given that mainland investors are more accustomed to digital channels than their counterparts in the city.

The first batch of southbound investment products under the Wealth Connect is likely to be simple-in-structure and low-risk financial products, according to advisory firm Grant Thornton. Chinese analysts say southbound investment will bolster the offshore renminbi and provide more diversified asset allocation choices for Chinese investors. 

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