A view of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) special section at the China International Financial Expo in Guangzhou, South China's Guangdong Province. Photo: IC

The People's Bank of China (PBC), the country's central bank, will conduct a trial of a cross-border investment service for residents of the Guangdong-Hong Kong-Macao Greater Bay Area to facilitate investment among the Chinese mainland, the Hong Kong Special Administrative Region (HKSAR) and the Macao Special Administrative Region.

The service can be divided into the "Southbound Linkage" and the "Northbound Linkage".

The "Southbound Linkage" will allow the mainlanders residing in the Greater Bay Area to open accounts and invest in financial products that are sold by banks in Hong Kong and Macao, while the "Northbound Linkage" will allow residents in Hong Kong and Macao to open bank accounts and make financial investments via mainland-based banks within the Greater Bay Area. 

The cross-border investment services will adhere to relevant laws and regulations applied in Hong Kong, Macao and the mainland, while adhering to international practices, said the PBC. 

The investment funds can only be used to purchase qualified investment products. Fund transfers will be settled in cross-border flows of yuan, and capital exchanges are to be completed in the offshore market.

The individual and total cross-border capital flows for the "Northbound Linkage" and "Southbound Linkage" will be monitored, and the latter will be subject to dynamic macro prudential regulation.

Industry insiders said the move is the latest effort by the central government to consolidate Hong Kong's status as an international financial center, adding that more measures are expected soon. The move also comes ahead of the expected adoption of the national security law for HKSAR.

"The new policy could facilitate residents from the Chinese mainland to invest in Hong Kong's wealth management products, and it would no doubt be a benefit to the HKSAR's financial industry development," a close follower of Hong Kong economic issues surnamed Li told the Global Times on Monday.

After China's central government has expanded investment channels through the Shanghai and Shenzhen stock investment links, which allow mainland investors to trade securities in each other's markets through the trading and clearing facilities of their home exchange, the new rule will mean closer financial ties, Li said.

The Hong Kong Monetary Authority (HKMA) welcomed the move. 

"The two-way cross-border investment service is another breakthrough in promoting Hong Kong's offshore yuan business and deepening the integration of the Greater Bay Area," Eddie Yue, chief executive of the HKMA, said in a statement on Monday.

"There is a growing demand for residents in the Greater Bay Area to invest in cross-border wealth management projects and the financial industries of both Hong Kong and the Chinese mainland have expressed great expectations for the upcoming cooperative project," he said.

The move will also help further integrate investment and financing activity between the mainland and Hong Kong, drive up overall trading volume, and increase the income of financial institutions engaged in related businesses, Liang Haiming, chairman of the China Silk Road iValley Research Institute and a Hong Kong-based economist, told the Global Times on Monday. 

It also brings huge business opportunities to the entire financial industry in Hong Kong, Liang noted.

"It offers an opportunity for Hong Kong's financial institutions to develop more wealth management products for investors in the mainland. Hong Kong's financial services industry accounts for approximately 20 percent of Hong Kong's GDP. Promoting financial development contributes to the economic development of the city," he added.


Newspaper headline: PBC launches new cross-border investment plan