By Selena Li and Xie Yu
HONG KONG (Reuters) – China and Hong Kong are set to expand a pilot wealth scheme that allows residents to invest cross-border by adding the first batch of 10 securities firms, including the countries’ largest brokerages, two people with direct knowledge told Reuters. The 10 securities companies include Hong Kong-listed China CITIC Securities, China International CorporationCompany (CICC), Huatai Securities and GF Securities, according to the people.
China Merchants Securities, PingAn Securities, Guotai Junan Securities, Guosen Securities, Guotou Securities and Zhongtai Securities are also in the first batch, the sources said, who declined to be named as they were not authorised to speak to media.
The China Securities Regulatory Commission and Hong Kong Securities and Futures Commission did not immediately respond to Reuters’ request for comment.
Guotou Securities could not be reached immediately for comment, while the other nine did not immediately respond to Reuters queries.
The new entrants to the cross-boundary scheme are set to benefit from rising demand from Chinese investors seeking offshore investments as domestic assets have been weighed down by a slowing economy and volatile markets. Launched in late 2021, the so-called “wealth connect” scheme allows residents of nine cities in the 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 in the world’s second-largest economy.
Expanding the scheme will mean China’s more sophisticated securities investors in the wealthy region are given an additional channel to invest offshore, gaining new access under China’s strict capital control with outbound investing schemes increasingly facing a quota crunch.
Mainland investors have so far invested 15.4 billion yuan ($2.16 billion) in offshore products under the scheme, compared with 24.6 million yuan Hong Kong and Macau residents invested northbound, according to data from China’s central bank. The scheme has seen a significant surge in investment from mainland clients to the offshore hubs this year, according to official data, as wealthy Chinese try to shield returns from a domestic economic and property sector downturn and a weaker Chinese yuan.
China’s A-shares’ turnover last week hit the lowest level since May 2020, with only 496 billion yuan ($69 billion) in volume traded in the session.
A total of 24 Hong Kong-based banks are eligible to serve southbound investments by mainland residents, while mainland regulators have approved 27 banks to serve northbound investments by Hong Kong and Macau-based investors.
($1 = 7.1437 Chinese yuan renminbi)
(Reporting by Selena Li and Xie Yu, Editing by Louise Heavens)
