Finance lobby group calls for bolder overhaul of GBA Wealth Management Connect scheme to boost Chinese investments

Regulators should take bolder steps to expand the Wealth Management Connect scheme and encourage more investments in Hong Kong products by mainland China-based investors, according to a finance lobby group.

The government’s recent adjustments are “steps in the right direction”, but further relaxations are needed, as the support provided now is “not significant” enough to revitalise the industry, according to Peter Stein, CEO of Asian Securities Industry & Financial Markets Association (ASIFMA).

The scheme should raise the investment quota of individual investors to 8 million yuan (US$1.1 million), up from the current 3 million yuan, Stein said. That would allow them to meet the threshold for being classified as “professionals”, giving them access to a wider range of products.

The scheme should also open more products to mainland investors, such as those managed by subsidiaries of Hong Kong-domiciled funds and primarily investing in global markets like the US and Europe, said Eugenie Shen, head of ASIFMA’s asset management group.

Giving mainland users more diverse choices could boost investments, she said. “It’s really about mutual benefits for both the industry and investors.”

The Hong Kong Monetary Authority and People’s Bank of China last month announced new measures to further improve the platform, including raising the individual quota from 1 million yuan to 3 million yuan, and adding higher-risk products.

Hong Kong asset managers should also be allowed to provide more advisory services, so that mainland investors can be better educated on the products on offer, she added.

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Founded in 2006, ASIFMA is an independent industry association representing global banks and asset managers, aiming to promote capital market development in Asia.

The group suggests that mainland market regulators should also relax cross-border information sharing by international financial firms.

If authorities allow foreign asset management firms to share their research in China with overseas entities, it could help enhance market credibility and attract more investments from abroad, she said.

“At least for the time being, the economic outlook in mainland China is still unclear and our members, some of the largest global financial institutions, tend to be more conservative,” Shen said. “So it’s good timing to implement further reforms, attract more foreign investors and shore up confidence.”