Macau’s wealth management scheme struggles to lure non-residents
Macau Business | April2024 | Special Report | Modern Finance
The pilot programme of the “Cross-Border Wealth Management Connect” for the Greater Bay Area “has been running smoothly since its launch in October 2021,” according to the Monetary Authority (AMCM).
In recent months, the programme that aims to attract wealth management to the Macau financial market has gained new momentum with what has been described as “the optimisation” of the pilot program. On 28 September 2023, the financial supervisory departments of Guangdong, Hong Kong, and Macau announced an understanding that includes simplifying the conditions for “Southbound Scheme” investors, expanding the scope of participating institutions and qualified wealth management products, as well as increasing the individual investment quota.
Last January, AMCM issued the refined “Implementation Rules for the Pilot Program of Cross-Border Wealth Management Connect in the GBA”, which “will more adeptly cater to the demands for cross-border asset distribution and wealth management among residents of the Greater Bay Area, including those in Macau.”
“In tandem, it will bolster the advancement of Macau’s modernisation of financial services, thereby facilitating the fulfilment of Macau’s ‘1+4’ strategy for adequate economic diversification,” explains the Monetary Authority to Macau Business.
Regardless of whether the pilot project needs to move to new levels, this redoubled effort by AMCM to boost the wealth management market has to do with two realities that the numbers highlight (see table on these pages): market value decreased in 2022, compared to 2021, and essentially only residents are interested.
The program, in these almost three years, has not attracted investment external to Macau (just 6.6 percent of the total).
Of these, most of the customers were from Guangdong Province and Hong Kong, while the investment portfolios of customers from Belt and Road Initiative (BRI) countries and Portuguese-speaking countries were valued at MOP 796.1 million and MOP 47 million respectively.
The ‘lack of interest’ of non-Macau investors in funds invested in Macau’s wealth management can be attributed to several factors,” stress António Tam and Jacinto Wong, both from the local law office MdME.
“Firstly, Macau’s wealth management industry may primarily focus on local investors who are more familiar with the market and prefer to invest in their home region. Secondly, Macau’s investment opportunities may not be actively promoted to non-Macau investors, resulting in limited awareness and access,” the two lawyers explained to Macau Business. “Regulatory and legal considerations may also pose barriers for non-Macau investors. Moreover, compared to other international financial centres, Macau’s wealth management industry may be relatively smaller in size and scope, offering fewer options and less liquidity.”
This is also the argument that the Senior Lecturer of the University of Saint Joseph (USJ), Emil Marques, explains to Macau Business: “The traditional wealth investment opportunities have historically lain in the ambit of Hong Kong, where the Hong Kong Stock Exchange has been operational for many years. Therefore, both the financial setup and legal framework in place have undergone multiple years of modification to cater to both local and international customers, both within the region and internationally.”
Emil Marques underlines that “in the face of competition from a variety of investment options in nearby markets, Macau would not be the initial choice for non-Macau investors to seek wealth management services or products.”
“As we reinvent the financial sector of Macau and link services or provide innovative services, such as in the green bond markets for companies from Portuguese-speaking countries or related ESG projects, we may see an increase in the percentage of non-Macau investors using our services in Macau in the future,” says the professor at the Faculty of Business and Law (USJ).
