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Asset Management / Wealth Management
Banks all set to go for Wealth Connect
First batch of products under GBA investment scheme expected to be rolled out this month
Janette Chen 13 Oct 2021

Chinese banks may start submitting applications to regulators to participate in the Greater Bay Area’s (GBA) Wealth Management Connect from this week. On the other side of the border, the Hong Kong regulator has received more than 200 applications from local banks.

The first batch of products under the mutual market access scheme is expected to be officially available to GBA residents before the end of October, providing new asset allocation options for residents in the bay area.

“The GBA Wealth Connect gives fund managers flexibility to meet investor demand. Under the Wealth Connect framework, managers can either offer existing Hong Kong products to new clients in the GBA, or they can build brand-new products that cater to GBA investors,” says Alexa Lam, chief executive, Asia-Pacific, ICI Global.

Almost 300 funds offering various renminbi investment options have registered in Hong Kong as of the end of June 2021, an increase of 54% over the past two years, according to Hong Kong Investment Funds Association. Fund managers such as China AMC (HK), J.P. Morgan and UBS have prepared qualified funds and are working closely with distributors.

“To be successful, it will be critical for fund managers to identify bank distributors within the GBA, establish a partnership, train them on their products and ensure that the banks have a strong protocol in place for conducting product due diligence and onboarding products,” says Lam. 

Meanwhile, Chinese players such as Ping An Fund and Rongtong Fund Management are ready to roll out their products, including mutual funds, for Hong Kong and Macau under the Wealth Management Connect. Bond funds and “fixed income plus” funds are expected to attract Hong Kong investors who seek asset preservation and profits under a low-interest-rate environment.

Chinese fund managers and distributors may face challenges in terms of regulatory compliance in Hong Kong and Macau, especially on the marketing side, a Chinese fund manager says, adding that they need to know more about the market and regulation to make the best out of the potential opportunities. 

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