HSBC and Stanchart Banks May Sell Investment Products in the Greater Bay Area

The HSBC Holdings Plc building, left, and the Standard Chartered Plc building are located in Hong Kong, China on Thursday June 4, 2020.

Roy Liu | Bloomberg | Getty Images

HSBC and Standard Chartered Bank are among more than a dozen lenders who can start selling investment products from Tuesday, as part of a new cross-border investment program that connects the capital markets of the Grande Baie region.

This comes as China continues to reform the mainland’s capital markets and increase their accessibility to international investors.

The Hong Kong Monetary Authority has approved 19 Hong Kong lenders under the Wealth Management Connect Scheme (WMC), which allows them to sell investment products in the Greater Bay Area, including Guangdong Province as well than the special administrative regions of Hong Kong and Macao. .

This will be the first time that retail investors will be able to engage in cross-border investments, according to Eddie Yue, managing director of HKMA.

Sixteen banks will be allowed to sell wealth management products in Hong Kong and mainland China, while three lenders – Bank of East Asia, Dah Sing Bank, DBS Bank – can only sell products to mainland investors through the ” Southbound Scheme ”.

“We will closely monitor the operation of the cross-border WMC and strengthen the education and investor protection work with the industry,” Yue said in a statement on Monday. He said the aim was to provide “more growth opportunities for Hong Kong’s banking and wealth management industry.”

Hong Kong-listed HSBC shares fell 0.11% while Standard Chartered closed flat on Tuesday after the announcement. Other banks that also received the approval, such as Bank of China and China Construction Bank, rose 1.47% and 0.74% respectively.

On Monday, Hong Kong Exchanges and Clearing launched its first A-share derivative, the MSCI China A 50 Connect Index futures contract. A shares refer to shares of companies based in Mainland China listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange.

“International investor interest in Chinese A-shares has increased,” Wilfred Yiu, co-head of Hong Kong Exchanges and Clearing, told CNBC’s “Squawk Box Asia” on Monday. He said the launch of the futures contracts marked “a new chapter for Hong Kong” and that the global allocation to Chinese markets was “still at a very, very early stage.”

“With the launch of the Connect A50 contract, which is a great index from MSCI, it will help international investors immensely from a risk management perspective – and it will add interest to entering the Chinese market. Yuu said.

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