Lower the threshold, raise the quota and then “expand”_Southern Network

On December 1, the Guangdong Branch of the People’s Bank of China and other departments issued the “Details for the Implementation of the “Cross-Border Wealth Management Connect” Pilot Business in the Guangdong-Hong Kong-Macao Greater Bay Area (Revised Draft for Comments)” (hereinafter referred to as the “Draft for Comments”), prepared for The much-anticipated “Cross-border Wealth Management Connect” version 2.0 of the Guangdong-Hong Kong-Macao Greater Bay Area has finally been launched. The reporter noticed that compared with version 1.0 of “Cross-border Wealth Management Connect”, version 2.0 has been optimized and upgraded in terms of investor access conditions, scope of participating institutions, scope of qualified investment products, and individual investor quotas. Industry insiders believe that version 2.0 of “Cross-border Wealth Management Connect” actively responds to market demand, will further increase the investment popularity of “Cross-border Wealth Management Connect” and promote the interconnection of the financial markets of Guangdong, Hong Kong and Macao.

　　Lower the threshold and increase the quota▶▷

Improve investment convenience

According to the “Draft for Comments”, version 2.0 of “Cross-border Wealth Management Connect” will further improve the convenience for investors to participate in the business pilot, and more investors will share the dividends of this policy.

First, it is to lower the entry threshold for investors. Specifically, the participation threshold for mainland investors in the “Southbound Link” business has been lowered from “five years of continuous payment of social security or personal income tax” to “two years”. At the same time, “my average annual income in the past three years is not less than 400,000 yuan” is added as one of the optional conditions for household financial asset admission.

Secondly, the individual investor quota is appropriately increased, and the investment quota of a single investor is increased from 1 million yuan to 3 million yuan. If an individual participates in the pilot through a bank and a securities company at the same time, each of the two channels has a quota of 1.5 million yuan.

Industry insiders said that lowering the threshold and raising the quota responded to the market’s expectations.

A brokerage source said: “The increase in the quota will greatly promote the activity of the ‘Cross-border Wealth Management Connect’ business.” At present, the risk-free rate of return in the Hong Kong market can reach about 5%, which is very attractive to mainland investors. The demand for “Southbound Link” quota is relatively large.

A mainland bank account manager told reporters that some “Southbound Link” investors are currently using the 1 million yuan quota at the “top level”, and there is an urgent need to increase the upper limit of the quota. “Recently, Hong Kong’s deposit products have become more attractive, and some customers want to increase the ‘Southbound Link’ limit to invest in Hong Kong deposits. If the personal limit is increased to 3 million yuan, the income obtained by a single customer will also be higher.”

　　Multi-faceted “expansion”▶▷

Added new securities firms to participate in the pilot

The addition of securities companies that meet the requirements as participating entities has always had a high market voice. The “Draft for Comments” adds securities companies to participate in the pilot and clarifies their participation methods and related business arrangements.

The aforementioned securities industry insider said: “Previously, the ‘Cross-border Wealth Management Connect’ was piloted in the banking system. Investors’ risk appetite was low and they favored more stable financial management. However, there are also many investors who have demand for high-yield investments, and securities firms are interested in high-yield investments.” The investment advice on high-risk products is more professional and will complement the business scope of the ‘Cross-border Financial Management Connect’.”

A Hong Kong brokerage employee also said: “Brokerages operate in the market, have the ability to independently develop and design products, and have diversified financial products, which can provide customers with efficient investment management portfolios.” Newly added securities firms as “cross-border financial management The participating entities of the “Cross-border Financial Management Connect” not only bring more choices to investors, but also provide them with transaction convenience and reduce investment costs. At the same time, they are conducive to the preservation and appreciation of investors’ assets and achieve the expected policy goals of the “Cross-border Financial Management Connect”.

At the same time as the participating institutions, there are also investable varieties that are “expanded”.

According to the “Draft for Comments”, “Cross-border Wealth Management Connect” will expand the scope of eligible products.

In the scope of “Northbound Connect” investment products, RMB deposit products of banks sold in the mainland will be added. At the same time, the scope of public securities investment funds with “risk levels from ‘R1’ to ‘R3’ will be expanded to public securities investment funds with risk levels from ‘R1’ to ‘R4’, excluding commodity futures funds.”

Industry insiders said that this means that “Northbound Connect” investment will cover most mainland public funds.

“For those Hong Kong and Macao investors who are able to participate in the ‘Cross-border Wealth Management Connect’ business and have relatively strong risk tolerance, this provides them with more options for equity-containing public funds products, coupled with the outstanding cost-effectiveness of investment in the current A-share market, this On the one hand, it will meet the needs of Hong Kong and Macao investors to allocate A-share public fund products through the ‘Cross-border Wealth Management Connect’, and on the other hand, it will also attract more allocation funds to the A-share market.” said a person from GF Fund.

　　Respond to market demand in a timely manner▶▷

Promote the interconnection of financial markets in Guangdong, Hong Kong and Macao

The release of version 2.0 of “Cross-border Wealth Management Connect” has received widespread attention and welcome from the industry.

“As the ‘Cross-border Wealth Management Connect’ business pilot continues to be optimized, the number of participants and investment scale of ‘Cross-border Wealth Management Connect’ are expected to further expand, which will bring new opportunities and inject new momentum into the development of wealth financial business in the Guangdong-Hong Kong-Macao Greater Bay Area. “The relevant person in charge of the Guangdong Branch of Bank of China said.

The “Cross-border Wealth Management Connect” in the Guangdong-Hong Kong-Macao Greater Bay Area is divided into “Northbound Connect” and “Southbound Connect”. It is the country’s first financial interconnection mechanism established specifically for individual investors. The business pilot has been launched for more than two years.

Since the beginning of this year, the number of investors participating in the “Cross-border Financial Management Connect” and the scale of fund transfers have increased significantly.

As of September 10, there were 60,000 individual investors in the Guangdong-Hong Kong-Macao Greater Bay Area participating in the “Cross-border Wealth Management Connect”, and the amount of cross-border fund transfers processed was 6.7 billion yuan. Among them, since 2023, there have been 19,000 new individual investors participating in the “Cross-border Financial Management Connect” in the Guangdong-Hong Kong-Macao Greater Bay Area, a year-on-year increase of 40.1%; the amount of cross-border fund transfers handled was 4.48 billion yuan, a year-on-year increase of 4.1 times.

At the same time, with the in-depth development of the pilot business, market entities have a strong demand for expanding the scope of institutions participating in the pilot, product scope and quota, and the “Cross-border Wealth Management Connect” version 2.0 came into being.

For example, the “Draft for Comments” refines the guidelines for cross-border publicity and sales, adding new cross-border publicity and sales activities that domestic sales agencies and domestic cooperative agencies can carry out.

A bank practitioner told reporters: “Previously, cross-border business development was very limited. Mainland banks could not go to Hong Kong and Macao to promote their products. According to version 2.0, there is more room for cross-border business development.”

Relevant people from GF Fund believe that this “expansion” will help attract more investors to use the “Cross-border Wealth Management Connect” to achieve diversified asset allocation and accelerate the development of the wealth management market in the Greater Bay Area. At the same time, it will also enhance the market attractiveness of the “Cross-border Wealth Management Connect” business and help further play the important role of “Cross-border Wealth Management Connect” in promoting the interconnection of the financial markets of Guangdong, Hong Kong and Macao.

Reporters from Nanfang Daily: Tang Liuwen, Zhang Yan, Chen Ying, Li Hualian