Tag Archives: GBA

Alibaba backs $2bn GBA startup fund

Tech giant Alibaba has announced it will be the anchor investor in a HK$2 billion fund to support startups in the Greater Bay Area.

The fund will target new companies in the region that focus on “sustainability, deep tech, health tech, artificial intelligence, automation and digital transformation of traditional manufacturing”, according to a company statement.

More on SCMP

Wealth Connect might be building unrealistic expectations

Hong Kong’s financial institutions are eyeing new revenue opportunities worth as much as HK$3 billion a year from the Greater Bay Area’s Wealth Connect Scheme, according to Bloomberg. However, a survey shows that mainland investors might have unrealistic expectations for the returns they can get from the cross-border investing scheme.

“This is a breakthrough for the retail investor to open up new ways of investing on the other side, across the boundary,” Bloomberg quoted Daniel Chan, head of the Greater Bay Area at HSBC, which is hiring 300 to 400 people in Hong Kong for its regional expansion, as saying. “We are in full swing preparation.”

“It’s a game of numbers in some ways,” said Hong Kong-based Samir Subberwal, head of consumer, private and business banking for Asia at Standard Chartered, which is hiring or promoting 3,000 managers for its Asia wealth business over five years. “The total revenue pool on account of this could be quite large.”

Their potential new customers might not be that easy to please, however. Mainland Chinese investors on average are looking at 13 per cent annual returns from their investments under the scheme, a level deemed as too high given the restrictions, according to a survey by the Hong Kong Investment Funds Association.

To achieve such high returns, mainland investors will have to invest in products with medium-to-high risk levels that have a higher exposure to equities, HKIFA chairman Nelson Chow was quoted as saying by SCMP. However, the scheme allows mainland investors to only invest in about 300 Hong Kong-domiciled funds with low to medium risks with exposure to bonds and large cap stocks.

“We hope the authorities will relax the Wealth Management Connect scheme in the future to allow investors to invest in products with different risks levels to fit their risk appetite,” Chow said. It’s “very difficult” to achieve 13 per cent without assuming more risks, he added.

More on Bloomberg and SCMP

Wealth Connect Scheme loosens further

Hong Kong financial services firms are rushing to find new partners in the Greater Bay Area after a change in regulation that allows them to do so under the Wealth Connect Scheme, according to the SCMP.

When the details of the cross-border scheme were initially unveiled in June last year, they  restricted each financial institution to one partner. But now, a senior executive at Standard Chartered Bank says this has been relaxed and his bank is in discussion with several potential partners in Guangdong. HSBC and DBS Bank are also engaged in similar discussions.

The Wealth Connect Scheme will allow financial institutions to sell offshore wealth management products to investors in Guangdong and, similarly, onshore products to investors in both Hong Kong and Macau. These will be strictly limited by quotas; however, they are seen as cracking open the mainland’s tightly controlled forex market by allowing cross-border investing in products other than stocks and bonds.

No reason was given for the change. However, analysts have been commenting recently on China’s apparent desire to keep its recently rising currency in check, while also gradually increasing its role in international trade. International banks and other wealth-management service providers have been on hiring sprees in recent months in the region, partly because of opportunities being presented under this and other cross-border financial trading schemes.

Read more on SCMP

CY, foreigners worry about cross-border business ties

Hong Kong’s former Chief Executive, Leung Chun-ying (CY), has spoken of his concerns that Hong Kong businesses could suffer lasting damage from not being able to travel into the mainland, as they are increasingly replaced in vital supply chains and partnerships. Travel restrictions have made it difficult for many business executives based in Hong Kong to see their suppliers, customers and partners on the mainland for more than a year as the Covid-19 pandemic has resulted in closed borders and strict quarantine rules.

At least Hong Kong residents of Chinese origin holding home-return permits have been able to travel into the mainland. Many other nationals based in the city have not even been allowed in. This is resulting in many of them questioning whether permanent damage has been done to the international business environment in China, according to an analysis by the SCMP.

Read more about CY’s views here and foreign business concerns here.

GBA part of new forex easing plan

The Greater Bay Area will be included in an official plan to further open China’s foreign-exchange controls, according to the the PBOC. Speaking at the 13th Lujiazui Forum in Shanghai, which started yesterday, Pan Gongsheng, the central bank’s deputy head, said both the QFLP and QDLP programs will be expanded in Shanghai, Hainan, and the GBA. 

The QFLP scheme allows foreign institutional investors to convert overseas capital into Chinese yuan-denominated funds that can be used to invest in the domestic private equity and venture capital markets. 

The QDLP program allows domestic fund managers to raise funds from qualified domestic institutional investors and set up trial funds for investment in overseas primary and secondary capital markets. 

More on Yicai

The Greater Bay Area: Introduction

Map: bayarea.gov.hk

The long-awaited Guangdong-Hong Kong-Macau Greater Bay Area (GBA) masterplan was released on February 18, 2019. As had been expected, the 59-page English translation reads like a broadly ambitious guide to how the region is expected to develop over the coming years, leaving more specific implementation details to be fleshed out by local authorities, albeit under the guidance of the central government.

Although short of detailed prescriptions, the document provides a glimpse into how quickly the region is likely to change in the coming years: by 2035, nine Guangdong cities plus the Hong Kong Kong and Macau SARs (“9+2”) should be the world’s leading “bay area”. This would involve roughly doubling the region’s GDP over the next 15 years, thereby surpassing Greater Tokyo, Greater New York and Greater San Francisco.

Continue reading The Greater Bay Area: Introduction

Explainer: the GBA’s Science and Technology Corridor

You might have heard about the ‘Innovation Corridor’ linking Guangdong’s tech hubs with Hong Kong. But what is it? Here we explain the basics of ‘One Corridor, Ten Cores, and Multiple Supporting Nodes.’ Forget Zhongguancun in Beijing; this is where ‘China’s Silicon Valley’ is being built.

Continue reading Explainer: the GBA’s Science and Technology Corridor

GBA property markets cool, not fast enough

Despite a contraction in bank lending to Guangdong’s real-estate market in Q2, property volumes and prices throughout the key GBA cities showed strength in the first half of the year as developers turned to alternative funding channels, latest provincial data shows. 

According to the latest report by the provincial housing bureau, GBA cities diverged from the rest of the province between the first and second quarters. This was primarily due to the cost of capital. The eastern, western and northern regions of the province saw a rise in volumes but prices fell, while the nine cities of the GBA saw a rise in both volumes and prices.

Guangdong sold a total of 63.218 million sqm in property during the first half, down 3.7% year-on-year. Total contracted sales, however, were RMB888.76 billion, up 6.6% year-on-year.

Continue reading GBA property markets cool, not fast enough