With remarkable growth in transaction and investor participation, the enhanced cross-border scheme is addressing operational challenges while expanding investment opportunities within the Greater Bay Area ( GBA ).
As the GBA continues to emerge as a global financial hub, the Wealth Management Connect ( WMC ) scheme has evolved from its 1.0 iteration to the 2.0 version by laying a solid foundation for deepening financial integration within the region. With more securities firms participating in the scheme, issues in cross-border collaboration are vital for further enhancing the region’s financial connectivity and driving greater participation in cross-border investments.
The WMC scheme – which allows for investors from both sides of the mainland China-Hong Kong border within the GBA to invest in eligible financial instruments offered by each other’s financial institutions – has achieved remarkable milestones under its 2.0 pilot programme. Launched in February 2024, WMC 2.0 has significantly expanded investor participation and market impact.
Total cross-border fund transfers under the WMC 2.0 scheme, according to data from the People’s Bank of China Guangdong Provincial Branch, reached 856.74 billion yuan ( US$117.02 billion ) from February to December 2024. This indicates a 6.2-fold increase compared with the 1.0 pilot period. Daily new account openings surged by 1.5 times, adding about 62,900 investors to the programme, with a total of 136,000 retail investors participating in the scheme by the end of the year.
The scheme’s scope broadened further in December 2024 with 14 securities firms being officially authorized to participate in the programme. This marks a significant milestone compared with the 1.0 pilot, which only permitted investments through commercial banks. Additionally, 34 mainland Chinese banks have now joined the programme, providing GBA investors with a wider array of investment options and channels.
Mainland Chinese investors, according to the implementation guidelines of the WMC 2.0, can now qualify with a minimum three-year average annual income of 400,000 yuan, an additional criterion for participation. And the investment limits are higher, with retail investment quotas increased from 1 million yuan to 3 million yuan. Additionally, more diversified products have been added to the scheme, including mainland Chinese RMB deposit products, which are now included in the northbound investment of the scheme.
The broadened product range, according to analysts, is expected to better meet the cross-border investment demands of GBA residents, enhance financial market connectivity and advance China’s financial openness.
Despite its successes, WMC 2.0 has faced operational challenges. Mainland Chinese securities firms without Hong Kong branches are actively seeking local partners, often facing issues in cooperation mechanisms and alignment of incentives.
While internal collaboration within the same corporate group can ensure standardized systems and consistent workflows, it risks creating a closed ecosystem. On the contrary, external partnerships with other firms, according to mainland Chinese securities firms, can leverage diverse expertise but may encounter difficulties in seamless integration.
In addition, distribution and sales teams in mainland Chinese bank branches have reported a perception of disproportionately benefiting their Hong Kong counterparts, necessitating better coordination at the corporate level, especially from the incentive perspective.
In the meantime, Hong Kong asset managers have highlighted the need for stronger collaboration with mainland Chinese distribution channels, particularly in investor education campaigns aimed at mainland Chinese investors.