The data of the first month after the launch of the "Cross-boundary Wealth Management Connect" 2.0 was released, and the amount of cross-border remittance and transfer of funds exceeded 13 billion yuan, with 24,300 new people participating in a single month

Interface News Reporter | Liu Chenguang

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 data, in March, 24,288 new individual investors participated in the "Cross-border Wealth Management Connect" in the Guangdong-Hong Kong-Macao Greater Bay Area, and domestic banks handled 20,574 cross-border remittances and transfers of funds through the closed-loop remittance and transfer channel, amounting to 13.106 billion yuan.

Chen Qingyao, Deputy Governor of HSBC China and General Manager of the Greater Bay Area Office, told Jiemian News that the implementation of the new version of the implementation rules has further broadened the depth and breadth of the "Cross-boundary Wealth Management Connect", lowered the entry threshold for investors and expanded the scope of participating institutions and investment products, which will attract more investors to participate in cross-border investment. Looking ahead, we hope to further facilitate cross-border investment for residents in the region, simplify the account opening process, and enable more residents in the region to diversify their investments and accumulate wealth through the Cross-boundary Wealth Management Connect, thereby accelerating the growth of their business scale.

More than 24,000 new investors were added in a single month

The so-called "Cross-boundary Wealth Management Connect" business refers to the cross-border investment of eligible investment products or wealth management products sold by the banks of the other party by investors from the Mainland, Hong Kong and Macao in the Guangdong-Hong Kong-Macao Greater Bay Area through a closed-loop capital channel established by the banking system in the region.

The Cross-boundary Wealth Management Connect is divided into "Northbound Scheme" and "Southbound Scheme". On 24 January this year, the revised Implementation Rules for the Cross-boundary Wealth Management Connect Pilot Program in the Guangdong-Hong Kong-Macao Greater Bay Area were officially released, and on 26 February, the Cross-boundary Wealth Management Connect 2.0 came into effect.

It is worth noting that there have been changes in the product scope and participation conditions of Cross-boundary WMC 2.0. For example, the threshold for Mainland investors to participate in the Cross-boundary Wealth Management Connect Southbound Business has been lowered from "5 consecutive years" to "2 years" after paying social security or individual income tax consecutively. "My average annual income in the past three years shall not be less than 400,000 yuan" is added as one of the alternative conditions for the admission of household financial assets. In addition, the investment limit for a single investor will be increased from RMB 1 million to RMB 3 million. If an individual participates in the pilot through a bank and a securities company at the same time, the two channels will each have a quota of 1.5 million yuan.

Statistics show that this month, 24,288 new individual investors participated in the "Cross-boundary Wealth Management Connect" in the Guangdong-Hong Kong-Macao Greater Bay Area, and domestic banks handled 20,574 cross-border fund transfers through the closed-loop fund remittance channel, amounting to 13.106 billion yuan.

Among them, 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 terms of business between the Mainland, Hong Kong and Macao, there were 18,518 cross-boundary WMC transactions between the Mainland and Hong Kong this month, with a cross-boundary remittance amount of RMB12.193 billion, accounting for 93.03% of the total remittance transfers, and 2,056 cross-boundary WMC transactions between the Mainland and Macao, amounting to MOP913 million, accounting for 6.97% of the total remittance transactions.

In terms of investment products, as of the end of March 2024, the market value of investment products purchased by individual investors participating in the Cross-boundary Wealth Management Connect was RMB16.441 billion. 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.

Industry: In the future, thresholds may be set for different products

Yu Lingqu, executive director of the Institute of Financial Development and State-owned Assets and State-owned Enterprises of China (Shenzhen) Comprehensive Development Research Institute, told Jian News reporters that it is still necessary to further expand the influence, compared with the Shanghai-Shenzhen-Hong Kong Stock Connect, the market impact of cross-border wealth management and the amount of cross-border funds are still small. For example, can more brokerages participate in a series of operations such as qualified investor identification, fund transfer, and return of earnings on the stock trading software?

Yu Lingqu believes that in the future, there is the possibility of further lowering the threshold, and the thresholds can be set separately, such as low thresholds correspond to low-risk products, and high thresholds can buy high-risk products. A breakthrough after the Wealth Management Connect should be for the mainland to buy Hong Kong's investment insurance, and there is no particularly good channel for it at present.

Chen Qingyao, Deputy Governor of HSBC China and General Manager of the Greater Bay Area Office, told Jiemian News that under 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.

In Chan's view, this trend is also reflected in the Cross-boundary Wealth Management Connect investment. In the past year, it can be seen that most of the Southbound investments of customers have flowed to deposit-like assets, while the Northbound investments have tended to choose products such as hybrid funds and bond funds to diversify the risks of investing in the local market. As the US enters a cycle of interest rate cuts 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 will become more diversified in their investments and allocate more to different types of products to balance risk and return.

Chen Qingyao said frankly that a recent survey of investors in the Greater Bay Area released by HSBC showed that more than 80% of mainland respondents who are eligible to invest in the "Cross-boundary Wealth Management Connect" have more than three years of investment experience, and most of the respondents who participate in the investment tend to make medium- and long-term investments through the "Cross-boundary Wealth Management Connect", while energy, technology, natural resources, biotechnology and finance are the most optimistic investment areas for investors.

Kwan Ka Man, Executive Director of DBS Bank (Hong Kong) Limited, told Jiemian News that the pilot optimization of the Cross-boundary Wealth Management Connect will play an important role in capital flows between Hong Kong and Macau, as well as the nine mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area. The business optimization will enable more Bay Area residents to obtain a wider range of investment options, flexibly adjust their investment portfolios according to market conditions and risk appetite, and better meet the cross-border investment and cross-border wealth management needs of Bay Area residents.