Hong Kong-based finance companies want to expand in Macau, as they look to take advantage of policies introduced by Beijing to diversify the casino hub into a financial services centre.
Everbright Sun Hung Kai, one of two licensed financial intermediaries in Macau, upgraded its wealth management platform to offer about 1,000 funds from 14 international fund houses in the former Portuguese colony, according to Jeff Kong, acting head of branch operations.
“We are planning to make bond products available for Macau investors as our near- term plan for Macau,” Kong said, noting that its recent expansion had resulted in a 50 per cent year on year increase in sales of wealth management products in 2021.
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Kong said he expects the company’s Macau operations to thrive as its mainland parent, Everbright Securities, has a big footprint in the Greater Bay Area, which includes Hong Kong, Macau and nine cities in China’s Guangdong province.
Macau’s financial services sector got its breakthrough Wealth Management Connect scheme in September, the first time the city has been included in a cross border trading scheme with the mainland. The scheme allows Chinese residents of Bay Area cities to buy investment products via banks in Hong Kong and Macau, and vice versa.
A total of 883 cross border transactions involving 53.29 million yuan (US$65.37 million) were conducted under the scheme between the mainland and Macau in November, according to data from People’s Bank of China’s Guangzhou branch.
Transactions between Hong Kong and the mainland were far higher. A total of 1,574 transactions worth 131.87 million yuan were conducted the same month.
However, it is a big development for Macau’s financial sector, which only has two financial intermediaries, 25 insurance companies and 31 banks. In comparison, Hong Kong has about 600 stockbrokers, 165 insurance companies and 160 banks.
Beijing also wants to set up a stock exchange in Macau, but there has been little progress since the announcement in 2019.
From January 29, Beijing will allow foreign investors to set up funds in the Macau-Hengqin zone under the Qualified Foreign Limited Partnership pilot scheme to raise money from both domestic and foreign investors, which will then be invested in mainland start-ups.
“The pilot policy launched in the Macau-Hengqin zone will further open up cross-border investment channels in the area, attracting more domestic and foreign asset management institutions and providing high-quality financial support for its construction,” said Kevin Yuan, a senior counsel at FenXun Partners, a Chinese law firm.
These policies are aimed at diversifying Macau’s economy, where the gaming sector contributed over half of the city’s US$54 billion gross domestic product before the outbreak of Covid-19.
British insurer Prudential, one of the largest insurers in Hong Kong, is also in the process of applying for a licence in Macau.
“Macau is a major city in the Greater Bay Area and we would like to have an operation there to capture the growing business opportunities,” said Derek Yung, chief executive of Prudential Hong Kong.
Manulife, another major Hong Kong insurer, last month appointed its chief strategy officer Carrie Tong as the head of its Macau branch, a newly created role.
“Manulife has been serving customers in Macau for 25 years and our Macau branch has grown rapidly,” Tong said.
Manulife’s sales in Macau tripled year on year in the first nine months of 2021, which was driven mainly by mainland visitors, with their buying representing 60 per cent of all sales in the city.
“We are optimistic about the growing opportunities in Macau,” she said.
The expansion of Macau International Airport along with many infrastructure and transport projects will strengthen the connection between Hong Kong, Macau and the mainland’s Greater Bay Area cities, she added.
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