Tag Archives: Wealth Connect Scheme

Amundi sees potential in Wealth Connect

French asset-management giant Amundi says it expects to launch products soon into the Greater Bay Area as part of the imminent launch of the Wealth Connect Scheme.

According to an interview in Bloomberg, the company has two to three moderately risked products lined up, focusing on fixed income or a mixture of equities and bonds. “We’re just waiting to push the button” once they get a nod from regulators, said Kerry Ching, CEO of Amundi in Hong Kong.

Amundi plans to more than double its assets under management in China within the next few years, the company said, from around US$120bn now to around US$250bn.

More on Bloomberg

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