By Xie Yu and Selena Li
HONG KONG (Reuters) – China and Hong Kong have expanded a pilot cross-border wealth connect scheme to include services offered by brokers, according to a regulator’s statement, broadening offshore investment options for residents in the world’s second largest economy.
A total of 14 securities firms have been chosen by the Hong Kong regulator to participate in the scheme and offer investment products to retail investors on the mainland, the Securities and Futures Commission of Hong Kong said.
The Hong Kong entities of Chinese securities firms including China International Capital Corporation and CITIC Securities will participate, it added.
The Chinese regulator will announce the confirmed mainland partner brokers which will offer services to offshore investors separately, the statement said.
Launched in late 2021, the wealth connect scheme allows residents of nine cities in China’s southern province of Guangdong, which borders Hong Kong, to buy investment products sold by banks in Hong Kong and Macau, while allowing residents of the two offshore centres to do the same on the mainland.
Regulators early this year tripled investment quotas for individuals and widened the investment products on offer.
The brokers will now be added to the list of banks who are allowed to sell investment products under the scheme.
This will offer China’s more sophisticated securities investors an additional channel through which to invest offshore under the country’s strict capital controls, where outbound investing schemes are increasingly facing a quota crunch.
There has been a surge in investments made by mainland clients in the offshore hubs since early this year, according to official data, although volumes recently eased as local banks trimmed deposit rates following rate cuts by the U.S. Federal Reserve, while China’s domestic stock market bounced back.
A total of 85.7 billion yuan ($12.03 billion) worth of transactions has been made between mainland and Hong Kong banks, accounting for 93.7% of the overall transactions under the wealth connect scheme, while the remaining 6.3% was with banks in Macau, data from China’s central bank shows.
Reuters reported in August that 10 securities firms, including the country’s largest brokerages were set to be included into the scheme.
($1 = 7.1233 Chinese yuan renminbi)
(Reporting by Xie Yu and Selena Li; Editing by Kirsten Donovan)
