Investment plan to connect HK, Macau with mainland

China announced details of a long-anticipated pilot scheme on Monday linking up investment of wealth management products in Hong Kong and Macau with neighboring cities, to further integrate the special administrative regions with the mainland.

“Wealth Management Connect” will allow residents of the two offshore centers and those in nine cities on the mainland, which together form the Greater Bay Area, to buy such products in each other’s markets.

Chinese mainland residents in the Greater Bay Area will be allowed to open special investment accounts with the banks in Hong Kong and Macau to buy their qualified wealth management products, while residents in Hong Kong and Macau can buy WMPs sold by mainland banks operating in the Greater Bay Area, the People’s Bank of China said in an online statement.

According to the statement, cross-border capital flow under the program will be capped, while individual investors will be granted a quota on their WMP investments.

Cross-boundary remittances in the scheme will be conducted in yuan and currency conversions will be done offshore, the statement said, adding the pilot’s official launch date would be announced later. The program is expected to support the development of the Greater Bay Area and will be conducive to promoting the opening of the area’s financial market to the outside world, the statement added.

It reflects “solid backing” from Beijing and that “Hong Kong continues to play a leading role in the country’s economic development and opening-up of financial markets,” the city’s leader Carrie Lam said in a statement.

“It represents a major breakthrough in Hong Kong’s offshore renminbi business development, and a significant step to foster closer financial cooperation in GBA,” Eddie Yue, chief executive of the Hong Kong Monetary Authority, said in the statement.