An imaginative illustration blending Hong Kong skyline with elements of securities trading. Photo: VCG
As the cross-boundary Wealth Management Connect (WMC) pilot program in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) gains traction, more mainland-based securities companies and commercial banks are expanding their presence in Hong Kong. While developing their own systems and teams, these firms are actively pursuing partnerships with Hong Kong-based institutions.
Guangzhou Rural Commercial Bank told the Global Times on Monday that it will join hands with Bank of East Asia to launch the WMC 2.0 (southbound) business starting the same day, in order to provide more convenient wealth management plans for its clients based in the GBA, while boosting capital flow and economic integration in the area.
Through this business model, GBA investors can access qualified investment products offered by the Bank of East Asia via a closed-loop management system jointly developed by the two banks. These products include 11 types of currency deposits and more than 260 qualified funds, the bank said.
A number of Chinese mainland-based brokerages, including GF Securities, CITIC Securities and China Galaxy Securities, successfully executed their transactions under the cross-boundary Wealth Management Connect (WMC) pilot program on December 4, marking the first inclusion of securities firms in the program.
The program obtained significant attention recently, with more mainland banks and securities firms seeking approvals to leverage the growing wealth management opportunities in the GBA.
"I have been following the cross-boundary WMC program during the past two years. I plan to invest this year in a variety of qualified wealth management products in the Chinese mainland, typically the funds and securities," Ken Wong, a permanent resident of Hong Kong, told the Global Times on Monday.
"Thanks to the program, Hong Kong residents now can access more flexible wealth management products across the boundary, and capitalize on rising opportunities in both Hong Kong and the mainland," Wong said, noting that he will carefully use the investment quota of 3 million yuan ($409,365).
Growth opportunities
For those mainland securities firms, the new business offers significant growth opportunities for them. China Galaxy Securities said in a note that the new wealth management scheme is set to help "promote high-level financial opening-up and expanding the connectivity between financial markets in the mainland and Hong Kong in a steady way."
The brokerage vowed to leverage its abundant human resources and rich wealth management experience to provide diversified investment channels and products to investors in the GBA and make greater contributions to financial market connectivity in the region.
The WMC program in the GBA was officially launched in September 2021. As one of the key initiatives that facilitate mutual market access between Hong Kong, Macao and the mainland, the program enables eligible investors in the GBA to invest in wealth management products distributed by eligible financial institutions through a closed-loop management scheme.
In February 2024, the revised rules of the Implementation Arrangements for the Cross-boundary WMC Pilot Scheme in the GBA became effective, which marked the official commencement of the WMC 2.0 program. The enhancements include eligible brokerages' participation, increasing the individual investment quota to 3 million yuan, and expanding the product scope to include funds with higher risk ratings.
As of the end of November 2024, the number of individual investors participating in the cross-boundary WMC in the GBA has risen from 73,400 in February to 126,300, marking a growth of over 72 percent, according to data released by the Guangdong Provincial Branch of the People's Bank of China (PBC).
Strengthening connectivity
"The WMC program enhances the cross-boundary circulation and utilization of the yuan, which is a milestone to shore up Hong Kong's position as an important offshore yuan trading hub, which will further consolidate Hong Kong's role as a major international wealth management center," Liang Haiming, chairman of the Hong Kong-based China Silk Road iValley Research Institute, told the Global Times on Monday.
Meanwhile, international investors will have improved access to more reliable and efficient investment channels for investing in the Chinese mainland, allowing them to participate more deeply and broadly in the mainland financial market through Hong Kong and benefit from China's economic growth, Liang said.
The stable development of cross-boundary WMC program clearly demonstrates the enhanced financial and economic connectivity among the mainland, Hong Kong, and Macao, assisting the institutional opening-up of the country's financial sector.
Starting from January 1, 2025, the enhancements to the mutual recognition of funds program between the mainland and Hong Kong will better meet cross-border wealth management market demand and support China's financial market liberalization, observers said.
"The GBA region has achieved significant progress in financial opening-up and integration over the past several years. In the long run, there is great room for the financial development in the GBA through closer cooperation, which will strengthen the GBA region's overall financial capacity and global standing," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times.
In the future, the PBC, the country's central bank, will continue to strengthen financial support for the development of the GBA by facilitating the integration of Hong Kong and Macao into the country's overall development, Wang Xin, head of the Research Bureau of the PBC, recently wrote in an article published on the Economic Daily.
According to Wang, the central bank will boost GBA cooperation through technology finance, green finance, inclusive finance, digital finance and more, so as to encourage Hong Kong- and Macao-based enterprises to participate in the development of the GBA and the broader mainland economy.
