The Hong Kong Monetary Authority formally announced the launch of the much anticipated Wealth Management Connect scheme, a cross-border link that will enable Hong Kong and mainland residents to buy investment products from each other’s markets.
The launch of the Wealth Management Connect scheme is part of broader plans to «further facilitate Hong Kong residents to develop, work and reside in the Mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), as well as strengthen the convenient flow of people, goods and funds within,» said an announcement issued by the HKMA last Friday.
This follows one day after a top central bank official in mainland China said the scheme – alongside the southbound leg of the Bond Connect scheme – would «start operating within the next few days».
What is Wealth Connect?
The Wealth Connect scheme is a cross-border link that will allow a freer flow of investment products within the 11-city GBA.
Residents of special administrative regions Hong Kong and Macau will be allowed to buy investment products from the remaining nine GBA cities, and vice-versa.
A total of 300 billion yuan ($46.5 billion) has been set as the aggregate quota for the two-way channel – 150 billion yuan each – with a limit of 1 million yuan per individual investor.
Market Opportunity
Projections for fee-based income from the new wealth link range from $500 million to $700 million per year.
About 300 investment funds in Hong Kong are qualified for sales to the nine GBA cities and over 20 banks are expected to apply for inclusion in the program, according to HKMA deputy chief executive Edmond Lau.
The HKMA started accepting applications on Friday, while mainland regulators will start doing so next month.
