(Yicai Global) June 29 -- The Greater Bay Area Wealth Management Connect scheme was given the green light by regulators today to start a pilot trial, paving the way for the financial integration of Guangdong province and the special administrative regions of Hong Kong and Macao.
Testing of the cross-border scheme will get underway as soon as the rules and systems have been determined, according to the People’s Bank of China, the Hong Kong Monetary Authority and the Macao Monetary Authority.
Individual residents across the Greater Bay Area, previously divided by different currencies and the ‘one country, two systems’ policy, will now be able to buy investment products in each other’s territories.
The new program is modeled on existing connect schemes, such as the Shanghai-Hong Kong and Shenzhen-Hong Kong stock links that allow international and mainland investors to trade stocks in each other’s markets through their home exchange.
Funds will be managed under a closed loop through the bundling of designated accounts, and only the purchase of qualified investment products will be allowed, the PBOC said. Total and individual quotas will be supervised and regulators will adjust the amount of cross-border capital flows based on macro-prudential factors, it added.
Mainland buyers investing in wealth management products in Hong Kong and Macau will be classified as ‘southbound,’ while investors from Hong Kong and Macau who open investment bank accounts on the mainland will be referred to as ‘northbound.’
Details concerning qualifications, investment methods, investment product scope, the protection of investor rights and the handling of disputes have yet to be announced.
Editor: Kim Taylor