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<Research>G Sachs: New Mainland Rules on Outbound Investment Have Limited Practical Impact on HK Banks and Insurers
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Amid market concerns sparked by Mainland regulations and news related to cross-border investment, share prices of Hong Kong banks and insurers under its coverage plummeted yesterday (4th), Goldman Sachs said in a research report. The market was broadly focused on the long-term impact of the new rules on Hong Kong business growth, particularly the Mainland resident segment. Goldman Sachs noted that two major regulations include the CSRC’s regulatory penalties on online brokers announced on May 22, and the "Regulations of the State Council on Outbound Investment" (State Council Order No. 837) issued on June 1 and set to take effect on July 1. Although certain banks had reportedly suspended the opening of Hong Kong investment accounts for Mainland residents at their Mainland branches, the broker’s channel checks indicated that relevant Hong Kong banks, including Standard Chartered, HSBC, BOCHK and BEA, mainly tightened account opening procedures, particularly for investment accounts, requiring clients to declare that their funds are from legitimate sources and originate from outside the Mainland. Goldman Sachs highlighted that deposit-taking and investment product account opening activities in Hong Kong remain ongoing across institutions, with no widespread suspension of client acquisition or cross-border banking services. In the banking sector, Goldman Sachs highlighted strong growth in wealth management income in recent years. As of May 2026, wealth management income accounted for about 34% of total fee or non-interest income and 29% of operating income for Standard Chartered and HSBC. For HSBC’s Hong Kong operations, wealth management fees contributed about 2-3% of group operating income, while Standard Chartered Hong Kong contributed about 40% of its total wealth income. For BOC HONG KONG (02388.HK) and BANK OF E ASIA (00023.HK), securities, asset management and insurance fee income in FY2025 accounted for 40-65% of their total fee income, representing 6-9% of operating income. The industry is now placing greater emphasis on Know-Your-Customer (KYC) procedures to verify that funds are genuinely used for investment purposes. In the insurance sector, regional insurers covered by Goldman Sachs, including AIA (01299.HK), PRU (02378.HK) and FWD (01828.HK), have long been prohibited from conducting business in the Mainland through their Hong Kong-based agents, with all sales processes required to be conducted within Hong Kong. Although the industry experienced tighter regulation in 2016 on UnionPay card payments for insurance purchases and additional requirements such as declarations of physical presence for Mainland Chinese Visitors (MCVs), there have been no substantive changes to these rules at present. In addition, according to data provided by AIA, about 90% of new business and renewal premiums from the MCV segment in 2025 were paid directly using funds already held in Hong Kong bank accounts, suggesting that the direct impact of the new policy on actual operations is manageable. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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