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Hong Kong and the Greater Bay Area will remain “super critical” to international investors coming to China, according to global asset manager Abrdn.
The Greater Bay Area will serve as a launch pad for clients seeking access to the China market, and Hong Kong will “always be important”, Rene Buehlmann, Abrdn’s Asia-Pacific CEO, said in an interview with the Post.
The Greater Bay Area is a regional initiative linking nine cities in southern China’s Guangdong province with Hong Kong and Macau into an economic and business hub. The bay area will lead to greater regional integration, Buehlmann said, adding that “Hong Kong has access to China and that remains critical.”
Buehlmann, who previously spent 29 years at UBS mostly in wealth management, said Abrdn actively uses Hong Kong’s various cross-border connect schemes to help its international clients access China’s markets. The Edinburgh-based firm manages £508 billion (US$573.1 billion) in assets.
China’s market is heavily under-researched, but schemes like Stock Connect allow Abrdn’s clients to tap into the mainland’s exchanges, said Buehlmann.
Stock Connect, which launched in 2014, allows international investors to trade mainland-listed equities via the Hong Kong stock exchange.
“Some schemes are still in the very early stages at the moment; [the government] still needs to flesh out a little bit better how international investors can better participate,” said Buehlmann.
Bond Connect and Stock Connect started out with small quotas and limits, but over time they were tried and tested and improved, said Buehlmann, who expects the same pattern to be replicated with the newer cross-border schemes.
The latest is Wealth Management Connect, which launched in September 2021. It has attracted over 35,000 investors who have invested some 1.37 billion yuan (US$189.6 million) as of end August, according to the latest data from the People’s Bank of China’s Guangzhou branch.
Industry players recently called for the scheme to be refined to increase the individual investment quota and offer a wider choice of products.
Sally Wong Chi-ming, the CEO of the Hong Kong Investment Funds Association, said earlier this month she would like to see the individual investment quota increased at least sevenfold to 7 million yuan.
Abrdn’s latest focus is on sustainable investment. In the last two years, the group has doubled the headcount of its environmental, social and governance (ESG) team in mainland China.
“Climate change and resource scarcity will not go away,” said Buehlmann. “We focus on things we can control, which today is making sure we build sustainable solutions.”
The group carefully analyses energy transition plans of its target companies. Firms that are committed to green initiatives and reducing impact on the environment are given a in-house score before Abrdn allocates money, said Buehlmann.
Despite an array of market opportunities in Hong Kong, doing business during the pandemic has not been easy for companies across a range of sectors. The city’s strict quarantine measures, which only recently dropped to a “0+3” system, led to an exodus of talent.
Abrdn has struggled to bring in and retain talent at its Hong Kong office during the last two years, said Buehlmann.
“If you really want to get talent and investors back, more needs to be done,” he added. “In a world where anywhere else you can travel freely, it’s just not enough.”
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