The first month of the new version of the "Cross-boundary Wealth Management Connect": account opening exploded! The number of new investors soared by more than 9 times month-on-month

The new version of "Cross-boundary Wealth Management Connect" is on fire!

On 23 April, the Guangdong Branch of the People's Bank of China disclosed the business situation of the Cross-boundary Wealth Management Connect in March 2024, which is also the first full month after the implementation of the new version of the Cross-boundary Wealth Management Connect.

According to the disclosed data, in the same month, the number of individual investors participating in the "Cross-boundary Wealth Management Connect" in the Guangdong-Hong Kong-Macao Greater Bay Area increased by 24,288, a significant increase of 9.16 times compared with February (2,391 new people), and the number of new account openings in a single month reached a new high.

Pilot banks are actively deployed

On 26 February, the new version of the Cross-boundary Wealth Management Connect was officially implemented. Compared with the previous version 1.0, the new version of the Cross-boundary Wealth Management Connect not only lowers the access requirements for investors and increases the quota for individual investors, but also broadens the scope of business pilots to better meet the diversified investment needs of residents in the Greater Bay Area.

Pilot banks are actively launching competitive products, especially for Hong Kong and Macau banks, which is a major opportunity to seize the "high ground" of business in the Greater Bay Area.

Chen Qingyao, Vice President of HSBC China and General Manager of the Greater Bay Area Office, told CBN that after the implementation of the new version of the implementation rules, HSBC has comprehensively upgraded the "Cross-boundary Wealth Management Connect" service, and now HSBC can provide about 250 products covering low, medium and high risk for north-south investors, and also strengthened the selection of fund portfolios, providing customers with more than 100 funds to invest in international and Asian markets, helping southbound investors to achieve portfolio diversification and internationalization.

At the same time, Mr Chan also said that the launch of the Cross-boundary Wealth Management Connect has further accelerated HSBC's integration of products and services in Hong Kong and Guangdong, and promoted closer collaboration between banks and the Group's securities, asset management and other institutions, as well as external partners, to serve customers in an integrated manner.

DBS Bank (Hong Kong) is one of the first banks to launch the WMC and the first to have three Southbound partners under the WMC scheme.

In an interview with CBN, DBS Bank said that under the new version of the Cross-boundary Wealth Management Connect, DBS Bank provides more than 220 wealth management products for Southbound investors, including more than 160 funds, 50 bond products and 11 deposit products in different currencies, of which more than 100 new fund and bond products have been added.

"In addition to traditional time deposits, we have added more income products, such as bonds, with maturities of less than 10 years and yields typically ranging from 4% to 5.5%. In addition, we also have certificates of deposit products to choose from, which are usually lower risk and offer a certain amount of guaranteed returns, which is very suitable for investors who are looking for relatively stable income. The person in charge said.

The number of mainland investors surpassed that of Hong Kong and Macao investors

As of the end of March, according to the data disclosed by the Guangdong Branch of the People's Bank of China, 24,288 new individual investors participated in the Cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area.

The number of new arrivals is mainly reflected in the Southbound Scheme. According to the data, in the same month, 1,051 new people from Hong Kong and Macao participated in the Northbound Scheme, and banks handled 454 cross-border remittance and transfer of funds under the Northbound Scheme, with an amount of 18 million yuan, while 23,237 new people from the Mainland participated in the Southbound Scheme, and banks handled 20,120 cross-border remittance and transfer of funds under the Southbound Scheme, with a cross-border remittance amount of 13.088 billion yuan.

As of the end of March 2024, 97,700 individual investors in the Guangdong-Hong Kong-Macao Greater Bay Area have participated in the Cross-boundary Wealth Management Connect, including 47,400 investors from Hong Kong and Macao, and 50,300 investors from the Mainland, involving 69,800 cross-border remittances of related funds, amounting to RMB28.389 billion.

In March, there were 18,518 cross-boundary WMC transactions between the Mainland and Hong Kong, amounting to RMB12.193 billion, accounting for 93.03% of the total remittances, and 2,056 cross-boundary WMC transactions between the Mainland and Macao, amounting to RMB913 million, accounting for 6.97% of the total remittances.

As of the end of March 2024, there were 58,800 cross-boundary WMC transactions between the Mainland and Hong Kong, with a cross-border remittance amount of RMB26.857 billion, accounting for 94.60% of the total remittances, and 11,000 cross-boundary WMC transactions between the Mainland and Macao, with a cross-border remittance amount of RMB1.532 billion, accounting for 5.40% of the total remittances.

In terms of the mainland business of the Greater Bay Area, during the month, the amount of cross-boundary wealth management connect business between Guangdong jurisdictions (including Guangzhou, Dongguan, Foshan, Zhuhai, Jiangmen, Zhongshan, Huizhou and Zhaoqing, the same below) and Hong Kong and Macao was RMB6.599 billion, accounting for 50.35% of the total cross-border remittance, of which the northbound business accounted for 0.12% and the southbound business accounted for 99.88%. The amount of cross-boundary wealth management connect between Shenzhen and Hong Kong and Macao was RMB6.506 billion, accounting for 49.65% of the total cross-border remittance, of which 0.15% was under the Northbound Connect and 99.85% was under the Southbound Scheme.

Among the nine mainland cities in the Greater Bay Area, Shenzhen, Guangzhou, Zhuhai and Foshan are the main drivers of the Cross-boundary Wealth Management Connect business, accounting for 83.84% of the remittance amount of the Cross-boundary WMC business as of the end of March 2024.

Most of the investments under the Southbound Scheme are deposit-like assets

After the launch of the new version of the Cross-boundary Wealth Management Connect, the market has responded enthusiastically and account openings have been booming, especially the southbound high-yield deposit products have attracted much attention. A number of pilot banks have launched preferential account opening activities, such as the preferential annual interest rate of US dollar fixed deposit is up to 10%, and the preferential annual interest rate of RMB time deposit is up to 6%.

Although the offer is limited to shorter maturity products (e.g. 3 months), its high interest rate, which is well above the market average, has attracted the attention of a large number of investors.

According to the data, in terms of investment products, as of the end of March 2024, the market value balance of investment products purchased by individual investors participating in the "Cross-boundary Wealth Management Connect" was 16.441 billion yuan.

Under the Northbound Scheme, the market value of domestic investment products held by Hong Kong and Macao individual investors was RMB201 million, including RMB122 million of wealth management products and RMB79 million of fund products, while the market value of Hong Kong and Macao investment products held by mainland individual investors under the Southbound Scheme was RMB16.24 billion, including RMB224 million of investment funds, RMB25 million of bonds and RMB15.991 billion of deposits.

Chen Qingyao also said in an interview with Yicai that according to his observations in the past year, most of the "Southbound Connect" investments among customers flowed to deposit assets, while the "Northbound Connect" investments tended to choose products such as hybrid funds and bond funds to diversify the risk of investing in the local market.

"In the current situation of increased market uncertainty, people's awareness of risk prevention has increased. More and more high-net-worth clients are re-examining the safety of their assets, and their financial management attitudes have become more stable than in the past, hoping to diversify risks through diversified asset allocation and achieve wealth preservation and appreciation. Chen Qingyao said.

"We have also noticed that in the volatile market and low-interest rate environment, mainland customers have started to have a certain demand for high-yield fixed deposits or fixed income financial products. The above-mentioned DBS bank official said that after the launch of the new version of the "Cross-boundary Wealth Management Connect", the cross-border wealth management needs of investors in the Greater Bay Area have been further released, and the number of account opening and investment scale of DBS Bank Hong Kong have increased significantly.

However, Chen Qingyao also said that as the United States enters the interest rate cut cycle this year and more products are included in the sales scope after the implementation of the "Cross-boundary Wealth Management Connect 2.0", it is expected that customers' investments will become more diversified and allocate more different types of products to balance risk and return.

The potential of the Northbound Scheme needs to be further explored

In addition, from the data disclosed by the Guangdong branch of the People's Bank of China, it can be found that the investment enthusiasm of the southbound link is much higher than that of the northbound link.

In this regard, the above-mentioned DBS Bank head analysis, interest rate spread and investment environment factors should be the main influencing factors, because the Hong Kong dollar is pegged to the US dollar, in the past year, the United States has raised interest rates sharply and strengthened the US dollar, which has led to a steady increase in demand for US dollar assets, and the demand of domestic customers for global allocation has increased.

DBS Bank officials suggested that with the advancement of the Cross-boundary Wealth Management Connect, the potential of the Northbound Scheme could be further tapped, including enhancing policy publicity and promotion, further broadening the scope of investment and wealth management products under the Northbound Scheme, and further streamlining the process of cross-border investment and capital flows, so as to attract more investors and funds.

At the same time, more and more institutions have expressed their hope to get the "admission ticket" of the "Cross-boundary Wealth Management Connect". He Xiuhong, general manager of UBS Fund Sales (Shenzhen) Co., Ltd., told Yicai that although the institution cannot directly participate in the "Cross-boundary Wealth Management Connect" at present, it is already exploring potential cooperation with companies that are qualified and interested in participating in the project.

"Some local financial institutions lack overseas experience and experience in serving customers in different markets, and we can share UBS's wealth management experience. We hope to be able to join the WMC programme in this way for the time being. He Xiuhong said.

In addition, Ho also suggested that different quotas for assets of different risk categories could be set up under the Cross-boundary Wealth Management Connect. For example, a less risky asset class (e.g., bond funds) can be moderately increased to enhance risk control and increase trading volume.

(This article is from Yicai)