Since its launch in September 2021, the Cross-boundary Wealth Management Connect (“Cross-boundary WMC”) scheme has made headlines and is often featured in commercials. The scheme offers investors more investment opportunities and product choices. Participating banks are gradually rolling out related services and products. Given there are specific cross-boundary remittance and investment arrangements in place for Cross-boundary WMC, and that the general public of Hong Kong may not be too familiar with Mainland investment products, investors interested in the scheme should first do their investment research and pay close attention to the following items.
Arrangements and rules of Cross-boundary WMC
Investors should thoroughly understand the details of the Cross-boundary WMC scheme, including the respective roles and obligations of Hong Kong banks and Mainland partner banks, funding and remittance arrangements, closed-loop funds flow and two-way fund transfer management requirements, quota management and complaint handling mechanism. For example, there is an aggregate quota and an individual investor quota under Cross-boundary WMC. When the Northbound quota is exhausted, the bank may suspend the Northbound remittance of funds in the investor’s dedicated remittance account so that new investment cannot be made. To quote another example, each investor can only maintain one dedicated remittance account in Hong Kong and one dedicated investment account in Mainland at all times. In the event that an investor has more than one account dedicated to remittances or investments, the bank will take follow-up actions regarding such non-compliance. (Learn about the operational arrangements, account opening and remittance of Northbound WMC)
Mainland investment products and their risks
Eligible northbound WMC investment products cover low-to-medium risk products distributed by banks in the Mainland, including (1) Mainland public securities investment funds and (2) public fixed income wealth management products and equity wealth management products issued by subsidiary wealth management firms of Mainland banks and eligible joint ventures between Mainland banks and foreign partners. (Learn about eligible investment products under the Northbound WMC)
After opening an account, investors can access investment product information and trade via the Mainland banks’ online or mobile platforms. With so much information at disposal, investors may be drawn to return figures, such as performance benchmark, annualized rate of return or historical returns, etc. However, investors should note that estimates of returns can only serve as a reference, and that past performance cannot be taken as an indication or a guarantee of future performance.
As all investments carry risks, you should note that Cross-boundary WMC investment products are not principal protected or interest/dividend guaranteed. Investors should not be consumed by chasing returns and overlook the risks (Learn about the key risks of Northbound WMC). In addition, the classification and naming of Mainland investment products may differ from those in Hong Kong. Do not rely solely on the product name or classification in making an investment decision. Investors should refer to the offer documents of Mainland investment products to understand product features and the associated risks, select products according to personal circumstances and risk tolerance levels. When in doubt, ask questions and seek clarifications from the banks.
Investor protection
Hong Kong investors buying Mainland investment products through the Cross-boundary WMC scheme are protected under Mainland laws and regulatory regime. Cross-boundary WMC has a complaint handling mechanism in place, through which investors may lodge complaints about investment products and services with the concerned Mainland banks. Banks in Hong Kong will also assist investors by referring their complaints to Mainland partner banks for follow-ups. For complaints involving Mainland banks, Hong Kong investors may lodge complaints with the Mainland regulatory authorities (Learn about the complaint mechanism).
