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Hong Kong Financial Services Council Releases Report on Financial Connectivity in Greater Bay Area – Guangdong, Hong Kong and Macao

1st July 2020 | Hong Kong

The Hong Kong Financial Services Development Council (FSDC) has released a research report on enhancing financial connectivity in the Greater Bay Area (Guangdong, Hong Kong and Macao).  The report provides an overview, opportunities and recommendations of financial services such as remittance, payments, loans, insurance, wealth management and investments to enhance financial connectivity in the Greater Bay Area.

” Population of 71.2 million, GDP $1.64 trillion and Per Capital of $23,075 in the Greater Bay Area “

The Greater Bay Area (GBA) comprises of 3 territories of China – Guangdong, Hong Kong and Macao, with a total population of 71.2 million, GDP of $1.64 trillion and GDP per capita of $23,075.

 

Financial Services Development Council Logo




 

The Financial Services Development Council (FSDC) report is titled “Hong Kong’s Unique Role in Enhancing Financial Connectivity in the Greater Bay Area.”

Links:

 

The Greater Bay Area (GBA), China

Shenzhen, China

The Greater Bay Area (GBA)

The Greater Bay Area (GBA) comprises of 3 territories of China – Guangdong, Hong Kong and Macao.

The Greater Bay Area (GBA) has a population of 71.2 million, with a combined GDP of $1.64 trillion and GDP per capita $23,075 in 2018.  The GBA has a total area of 56,094 square km.  (Statistics from Hong Kong Trade Development Council)

Summary 

  • Greater Bay Area (GBA), China
  • Cities: Guangdong, Hong Kong and Macao
  • Population: 71.2 million
  • GDP: $1.64 trillion 
  • Per Capita: $23,075
  • Land Area: 56,094 square km

 

Background of the Greater Bay Area (GBA)

The concept of “Guangdong-Hong Kong-Macao GBA” was included in national documents for the first time in 2015.  In July 2017, the National Development and Reform Commission (NDRC) and local governments of Guangdong, Hong Kong and Macao jointly signed a “Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Greater Bay Area” in Hong Kong, marking the official starting point of the GBA strategy.

In February 2019, the Outline Development Plan was released, setting out the overall development blueprint for the GBA and specifying the strategic advantages and roles of each city in the area. 

 

The FSDC Report

Hong Kong Zhuhai Macao Bridge

The FSDC Report

Report: Hong Kong’s Unique Role in Enhancing Financial Connectivity in the Greater Bay Area

Recommendations

The report proposes recommendations intended for Hong Kong’s financial services sector to capture opportunities posed by the Greater Bay Area (GBA) development and enhance the financial connectivity in the area, by capitalising on its unique strengths and through providing quality financial services and products across the region. 

Recommendations:

  1. To connect payment and transfer infrastructure in the GBA 
  2. To enhance the convenience of remote account opening 
  3. o foster cross-boundary property-backed mortgage loans 
  4. To develop cross-boundary insurance business 
  5. To expand two-way wealth management and investment channels 

Example of Recommendations:

  • To increase daily cross-boundary remittance limit (RMB 80,000)
  • Streamline remote account opening in GBA
  • Representatives granted qualification in the GBA (Pass Examinations or Register with Regulators)
  • To standardise property mortgage registration in GBA
  • To launch Wealth Management Connect

 

Wealth Management Connect 

HSBC Hong Kong Branch
Southbound investment 
  1. Mainland investors can open a designated Wealth Management Connect account with a Hong Kong bank
  2. Transfer renminbi or foreign currencies through their GBA Mainland bank account to the designated investment account
  3. Purchase financial products provided by qualified financial institutions in Hong Kong (e.g. banks, insurance companies, fund managers, securities companies).

Mainland investors ~ China mainland investors, excluding Hong Kong and Macao

 

Northbound investment
  1. Hong Kong investors can open a designated investment account with a Mainland bank in the GBA
  2. Remit renminbi or foreign currencies through a Hong Kong account under the same name to the Mainland investment account
  3. Purchase financial products in the Mainland

Eg. RMB 500,000 investment sum could be set to allow relatively sophisticated investors to participate in the pilot scheme.  The standard should be lowered or lifted as appropriate when the mechanism is mature. 

 

Capital Market Connectivity Schemes

Private Bankers

Existing capital market connectivity schemes include Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect and Mutual Recognition of Funds.  The new scheme will be Wealth Management Connect.

  • Shanghai-Hong Kong Stock Connect
  • Shenzhen-Hong Kong Stock Connect
  • Bond Connect
  • Mutual Recognition of Funds
  • Wealth Management Connect (New)

 

Key Numbers

Hong Kong | Leading financial centre in Asia

 

  • In 2018, financial services accounted for 19.8%  of Hong Kong’s GDP (Hong Kong GDP 2018 : $361 billion)
  • In 2019, insurance premium of RMB 639.0 billion in Guangdong (12.4% of China Mainland)
  • In 2019 MOP 28.46 billion worth of gross premiums life and non-life insurance in Macao
  • In 2019, Gross premiums reached HKD 580.2 billion in Hong Kong
  • In 2019, premium for new policies bought by Mainland visitors was HKD 43.4 billion, accounting for 25.2% 
  • Critical illness, life insurance and medical products were the most popular for Mainland visitors, accounting for 57%, 34% and 3% of new policies
  • HNW families in Guangdong province was 285,000 (asset worth over RMB 10 million / $1.42 million)
  • Wealthy families in Guangdong province reached 679,000, ranking second and accounting for 17.3% of these families in the Mainland (asset worth over RMB 6 million / $0.85 million)

Links:

 

Chairman of the FSDC, Mr Laurence Li SC 

“With complementary advantages of respective markets and systems in the GBA, the financial services industry in Hong Kong has much expectation on the coordinated development of the region. At the same time, different stakeholders have been engaging in conversations and preparatory work to enhance the connectivity and standards of financial services and product offerings.

With some favourable measures being introduced and implemented in an orderly manner, the industry believes the ever-improving connectivity of financial markets will lead to uncharted market potentials.” 

 


About the FSDC

Financial Services Development Council Logo

The FSDC was established in 2013 by the Hong Kong Special Administrative Region Government as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of the financial services industry of Hong Kong and to map out the strategic direction for the development. 

The FSDC has been incorporated as a company limited by guarantee with effect from September 2018 to allow it to better discharge its functions through research, market promotion and human capital development with more flexibility. 

Visit: FSDC Website





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