China, H. Kong add 10 firms to wealth connect scheme

China and Hong Kong plan to expand a pilot wealth scheme that enables residents to invest cross-border by including 10 securities firms, including major brokerages like China CITIC Securities, CICC, Huatai Securities, and GF Securities, informed sources told Reuters.

The expansion aims to capitalise on growing demand from Chinese investors seeking offshore investment opportunities. China’s domestic market has faced headwinds from a slowing economy and volatile market conditions.

The wealth connect scheme, introduced in 2021, allows residents of nine cities in Guangdong province bordering Hong Kong to invest in products offered by Hong Kong and Macau banks. Residents of the two offshore centers can do the same with mainland China.

The expansion will provide sophisticated investors in wealthy regions of China with a new channel for offshore investing, bypassing China’s strict capital controls and limited outbound investment quotas.

Mainland investors have so far channeled 15.4 billion yuan ($2.16 billion) into offshore products through the scheme, compared to the 24.6 million yuan invested northbound by Hong Kong and Macau residents.

The expansion plan includes 24 Hong Kong-based banks approved to serve southbound investments by mainlanders, while 27 mainland banks have been authorised to serve northbound investments from Hong Kong and Macau.

Attribution: Reuters

Subediting: Y.Yasser