Tag Archives: standard chartered

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

StanChart gets going on virtual bank

As one of the first three joint ventures granted a virtual banking license in Hong Kong, Standard Chartered has embarked on a PR effort to raise awareness of what it is doing. The bank’s Hong Kong CEO, Mary Huen Wai-yi, told the 21st Century Business Herald that the virtual bank will focus initially on providing basic deposit and lending services, which would not have minimum-balance requirements, while the process of opening an account would be easier than at a traditional bank.

Standard Chartered won the license in a venture together with Hong Kong Telecom, PCCW and China’s largest online travel agency, Ctrip. Huen did not reveal the product brand that will be offered by SC Digital Solutions, but said that it has already recruited around 100 staff from home and abroad.

Huen said the bank will ramp up its pre-opening operations over the next six to nine months. It is building capabilities in risk management, anti-money laundering, identity verification and online account set-up. The goal is to bring banking services into people’s day to day lifestyles – which are increasingly online. For example, if a user needs to book an overseas hotel through Ctrip, they should be able to do currency exchange and buy travel insurance seamlessly with the new bank.