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HSBC and 18 other banks can now sell wealth investment products in the Greater Bay Area

HSBC and 18 other banks can now sell wealth investment products in the Greater Bay Area

19 Oct 2021

The HSBC Holdings Plc building, left, and the Standard Chartered Plc building stand in Hong Kong, China, on Thursday, June 4, 2020.

Roy Liu | Bloomberg | Getty Images

HSBC and Standard Chartered Bank are among more than a dozen lenders that can start selling investment products from Tuesday, under a new cross-border investment scheme that connects capital markets in the Greater Bay Area.

It comes as China continues to reform the mainland’s capital markets and raise their accessibility to international investors.

The Hong Kong Monetary Authority has approved 19 Hong Kong lenders under the Wealth Management Connect Scheme (WMC), which allows them to sell investment products in the Greater Bay Area — comprising of Guangdong province as well as the special administrative regions of Hong Kong and Macao.

This will mark the first time retail investors can engage in cross-boundary investments, according to Eddie Yue, chief executive of the HKMA.

Sixteen banks will be allowed to sell wealth management products in both Hong Kong and mainland China, while three lenders — Bank of East Asia, Dah Sing Bank, DBS Bank — can only sell products to mainland investors via the “Southbound Scheme.”

“We will closely monitor the operation of the Cross-boundary WMC and step up investor education and investor protection work together with the industry,” Yue said in a Monday release. He said the goal was to provide “more growth opportunities for Hong Kong’s banking and wealth management industry.”

Hong Kong-listed shares of HSBC slipped 0.11% while Standard Chartered closed flat on Tuesday following the announcement. Other banks that also received approval, such as Bank of China and China Construction Bank, rose 1.47% and 0.74% respectively.

On Monday, the Hong Kong Exchanges and Clearing launched its first A-share derivative product, the MSCI China A 50 Connect Index futures contract. A-shares refer to stocks of mainland China-based firms listed on the Shanghai Stock Exchange or Shenzhen Stock Exchange.

“International investors’ interest in China A-shares has been increasing,” Wilfred Yiu, co-head of markets at Hong Kong Exchanges and Clearing, told CNBC’s “Squawk Box Asia” on Monday. He said the futures contract launch marked “a new chapter for Hong Kong,” and that global allocation to China’s markets is “still at a very, very early stage.”

“With the launch of the Connect A50 contract, which is a great index by MSCI, it’s going to help tremendously from the risk management perspective to international investor – and that will add on in terms of the interest of coming into the China market,” Yiu said.