It has been two years since the launch of Wealth Management Connect (WMC) in the Greater Bay Area (GBA). This month, regulators have unveiled revised implementation measures to better support and supervise the scheme, marking the launch of an upgraded version of the cross-border investment scheme.
Compared to its predecessor, WMC 2.0 introduces optimizations in investor eligibility, participating institutions, qualified investment products, and individual investor quotas.
WMC started its pilot phase in September 2021 under the supervision of regulatory authorities in mainland China, Hong Kong and Macau. As of the end of October this year, WMC has attracted 62,900 retail investors in the GBA, with 44,600 from Hong Kong and Macau and 18,300 from mainland China. There were about 35,500 transactions under WMC, totalling 8.66 billion yuan (US$1.21 billion), according to the latest data from the Guangdong branch of the People's Bank of China.
Under WMC 2.0, the entry threshold for mainland Chinese investors in the southbound trading channel has been reduced from payment of social security or personal income tax for five consecutive years to two years. This relaxation broadens the target customer base, particularly catering to the emerging presence of the younger Generation Z in the investment and wealth management space.
In addition, the retail investor's investment quota has been raised to 3 million yuan from 1 million yuan. For those using both banks and securities firms as investment channels in the pilot programme, each channel now offers a personal quota of 1.5 million yuan.
The range of eligible products has widened as well, with the inclusion of renminbi deposit products distributed by mainland Chinese banks in the northbound trading channel. Additionally, the range of eligible mutual funds investing into securities has been extended from "R1 to R3 risk levels" to "R1 to R4 risk levels", excluding commodity futures funds. Version 2.0 also allows the participation of more securities firms.
The cross-border investment scheme seeks to further energize the wealth management markets in the GBA, strengthening the interconnection between the capital markets of Hong Kong and mainland China and offering more diverse asset allocation opportunities for a broader scope of investors.
By revising relevant regulations, WMC 2.0 seeks to align more closely with the development of the GBA, offering unique opportunities with regulatory support for investors and financial institutions in the area.
For retail investors, the relaxation on the entry thresholds and simplified procedures provide greater flexibility in selecting investment products. Version 2.0 is more able to cater to their demand for cross-border asset allocation.
Banks have already commenced preparations for WMC 2.0 in terms of business development, administration processes, and systems improvement.