China in Focus
Finance Opportunities in the GBA
Finance Opportunities in the GBA  <br/>大灣區金融機遇

Financial services is among the sectors best placed to benefit from the Greater Bay Area initiative. 

At a Chamber webinar on 9 October, a panel of experts explored how Hong Kong can capture the opportunities arising from the latest developments.

Rocky Tung, Head (Policy Research) at the Financial Services Development Council, noted that the GBA had been developing consistently since the initiative was launched, even amid this year’s disruption.

He introduced the council’s recent report on “Hong Kong’s Unique Role in Enhancing Financial Connectivity in the GBA,” with key recommendations including improving the connectivity of infrastructure for payments and transfers. The Covid-19 outbreak has encouraged the move towards digital payments, with Hong Kong’s Faster Payment System seeing a surge in both new users and volume of transactions, Tung said. 

“The pandemic has been driving the adoption of innovation, so going forward I expect we will see that trend continue.”

The report also recommends further development of cross-border account opening, insurance and mortgages. In fact, Tung explained, since the FSDC report was published, the Guangdong Government had announced plans for cross-border mortgages. Tung added that the majority of the FSDC’s recommendations so far have been adopted, so it is hoped that its latest proposals will also come to fruition.

Jimmy Jim, Head of Global Markets, ICBC (Asia), said that the policies announced in May regarding the financial services sector in the GBA would bring new opportunities for RMB business, bonds and fintech. The various “Connect” schemes were providing new options for investors on both sides of the border.

“In a nutshell,” he said, “these developments are providing more convenience.”

The ongoing relaxation of rules on cross-border transactions is a “win-win” situation, providing more options for investors and more opportunities for corporate and retail banks.

As connectivity among the cities increases, Jim also expects the different cities’ roles to be enhanced, with Hong Kong focusing on areas like green bonds and asset management. 

Jim also noted that the pandemic had helped spur the growth of virtual marketing among ICBC’s corporate customers. 

Edward Lau, Deputy Chief Financial Officer at New World Development, discussed the increasing demand for cross-border property loans.

Demand for property in the GBA is expected to continue to rise, with Shenzhen’s population growing by as many as half a million people per year. Lau added that when he speaks to people in Boston they find this difficult to imagine – the annual increase in Shenzhen is equivalent to almost the whole population of Boston. 

Lau explained that cross-border loans in the past were complicated and required a great deal of documentation. Now, under certain pilot schemes, the process has been greatly simplified. Other benefits for Hong Kong-based borrowers include lower interest rates and better legal protection.

The development of the cross-border loan market will not only benefit investors, but also enable Hong Kong financial institutions to access assets in the Mainland, Lau said, adding that he expected policy in this area would continue to develop. 

Josephine Kwan, Partner at PwC Hong Kong, introduced a recent PwC report on “Adopting a GBA Mindset.”  Respondents said that the flow of talent, data and capital were crucial, but that hurdles remained due to the three different systems in the region.

Efforts are being made to address these concerns: for example, changes to the income tax environment will enable certain qualifying professionals to pay tax at rates equivalent to Hong Kong. 

“This is a very important step for the GBA to attract people to live and work in the region,” Kwan said.

On capital flow, the Wealth Management Connect will open more financial products to investors on both sides of the border. Data flow is also improving, and Kwan remarked that the Mainland’s advanced technology means that it will be able to use credit data to facilitate lending to SMEs. She also expects to see further growth in virtual banks as restrictions on their operations are lifted.

Rocky Tung, Head (Policy Research) at the Financial Services Development Council