Financial institutions attract deposits at 8% high interest rates, and there is a resurgence of enthusiasm for opening accounts in Hong Kong: some people queue up at 7 o'clock to wait for account opening customers | Hong Kong dollars | Financial institutions

At around 7 am on June 28th, a long queue had already formed in front of the "Internet celebrity account opening point" Bank of China Hong Kong Hong Kong City Branch. Opening an account at a bank in Hong Kong usually requires an appointment, and this branch allows on-site queuing without an appointment.

The bank staff dispatched the number at 8:30. Mr. Chen, who was waiting in line at 7 o'clock, was fortunate to have arrived early and received the number 7. Another lady picked up the number at 8:43, which was already on the 44th. The staff told her that she could go somewhere else to visit first and then go there at 2 pm in the afternoon.

Opening an account usually takes 30-45 minutes, and at 9:40, Mr. Chen is still waiting. He opened an account mainly to buy insurance and wanted to receive the card on site after opening the account. He also came to queue early in the morning because he was worried about the limited number of bank cards available every day.

After the resumption of customs clearance, more and more mainland investors like Mr. Chen are going to Hong Kong to open accounts and buy wealth management products. Even if they make an appointment, they may not be able to arrange it immediately. It is not uncommon to have to wake up early and queue up to open accounts.

On June 28th, an Economic Observer reporter learned from the Tsim Sha Tsui branch of HSBC that the bank's scheduled account opening has been scheduled for after July 17th.

The Harbour City Gateway Building, located 700 meters away from the Bank of China Hong Kong Hong Kong City Branch, is the main stronghold for many insurance companies in Hong Kong. Some mainland customers cannot queue up at the bank early in the morning. Insurance company agents will queue up for customers to get their numbers, and at the bank entrance, they will also see if they can attract business.

In order to grab customers, insurance companies and banks are all competing with friendly businesses. Insurance companies are constantly expanding their coverage and launching exclusive products, while some banks are offering 8% high interest deposits and hundreds of yuan in cash rewards for new account openings and new funds.

"Selling 500 million premium for two consecutive months"

On the morning of June 27th, an Economic Observer reporter saw at the reception and payment center on the 17th floor of the Prudential Building in Hong Kong that even on weekdays, mainland visitors who came to inquire about insurance business almost filled the entire reception center.

Ms. Zhang is a local agent of Prudential Insurance in Hong Kong. She introduced that there are more people in the afternoon than in the morning, and there are more people on weekends or holidays. The reception center cannot sit down, and she always arranges customers to go out to discuss business.

Due to over 90% of Hong Kong locals having already purchased insurance, Ms. Zhang has mainly served mainland customers. In the past three years, mainland visitors have been unable to visit Hong Kong, resulting in a sharp decline in her income; After customs clearance, her monthly reception volume almost exceeded the sum of three years, and the number of signed orders increased significantly. In some months, there were one to two large orders worth tens or millions of Hong Kong dollars.

Ms. Zhang introduced that in order to attract customers, the company's critical illness insurance products have been comprehensively upgraded in the past month, with a coverage rate of 1100% from the previous 660%, and the coverage range expanded from 117 to 127 types; Some regulations have also been adjusted, for example, the biggest move for child protection is that if the policyholder of the child dies, the policy will continue to be in effect, and the insurance company will pay the remaining fees for the child. However, according to previous regulations, other guardians of the child still need to continue to purchase insurance in order for the policy to continue to be in effect.

In addition to critical illness insurance and medical insurance, savings insurance is also a preferred type of insurance for mainland customers, as this type of insurance is usually a multi currency savings plan, with currencies including US dollars, Australian dollars, pounds, Canadian dollars, Hong Kong dollars, Chinese yuan, etc. It can flexibly convert policy currencies, and policy ownership can also be passed on to future generations.

An agent of Hong Kong Manulife Insurance Company told reporters that mainland customers usually prefer to purchase USD savings plans to achieve the goal of diversified asset allocation. Customers who pay annual premiums for a certain product can enjoy a 10% discount on the down payment premium.

The Personal Financial Services Report for the Greater Bay Area released by Bain Corporation and Hang Seng Bank pointed out that more than half of mainland customers expressed that Hong Kong products are more attractive and valuable. They believe that the claims conditions for Hong Kong insurance products are clearer and more transparent, and the coverage area of the policy is also wider.

Ms. Zhang signed a large order at the end of May, with a couple from Dalian who were in their 40s and pregnant. She saw that the coverage of the critical illness insurance included jaundice, postpartum depression, severe autism in children, severe eczema, etc. She bought several policies with a total premium of over HKD 500000. Her wealth management team, consisting of over 1000 people, achieved sales of HKD 500 million in three to four months this year. However, during the pandemic, the monthly sales were less than HKD 100 million.

The insurance industry statistics released by the Hong Kong Insurance Regulatory Commission show that in the first quarter of 2023, the premium level of new manufacturing business for mainland visitors rebounded to HKD 9.6 billion, a year-on-year increase of 2686.4%. The corresponding level in the first quarter of 2019 was HKD 12.8 billion, and the overall level has returned to around 70% of pre pandemic levels. As in the past, approximately 97% of the policies purchased by this customer group were paid through non lump sum payments, with lifetime insurance, critical illness insurance, and medical insurance accounting for 56%, 33%, and 5% of the issued policy shares, respectively.

Hong Kong banks offer high interest rates to attract deposits

Before opening a Hong Kong bank account, Mr. Chen's insurance agent suggested that if there is short-term working capital, some principal guaranteed time deposits can be made as well. Currently, the interest rates for Hong Kong dollar and US dollar time deposits are relatively considerable compared to mainland Chinese yuan deposits.

The Federal Reserve has raised interest rates 10 times in this cycle, and the federal funds rate has been raised to between 5% and 5.25%. Hong Kong has raised interest rates 4 times since September last year, raising the benchmark rate to 5.5%. Major banks in Hong Kong have also gradually raised deposit rates in Hong Kong dollars and US dollars.

In mainland China, mainstream commercial banks such as state-owned banks and joint-stock banks have been continuously lowering interest rates recently, and deposit interest rates have basically bid farewell to the era of "3%"; Since the second quarter of this year, the exchange rate of the Chinese yuan against the US dollar has been under continuous pressure. On June 29th, the onshore RMB fell below the 7.25 mark against the US dollar during trading, while the offshore RMB fell below the 7.26 mark against the US dollar.

Hong Kong dollar and US dollar fixed deposits are called "fragrant steamed buns". After opening an account, Mr. Chen consulted with relevant staff of Bank of China Hong Kong and learned that the minimum investment amount for new customers to make Hong Kong dollar fixed deposits is HKD 10000. They can enjoy discounts of 3.3% annual interest rate for 3 months and 3.4% annual interest rate for 6 months by applying through online banking or mobile banking. Mr. Chen told reporters that this type of deposit product will also be considered during the validity period of the discount.

The discount for opening a new account is not particularly high for Bank of China Hong Kong. The reporter visited major Hong Kong banks and found that some banks require new customers to have low entry fees, but the annual interest rate for Hong Kong dollar deposits is above 4%. For example, new customers of Bank of East Asia require a minimum deposit of HKD 20000 and can enjoy a 3-month annualized interest rate of 4.15% for fixed deposits. Some banks have slightly higher requirements, but the annual interest rate is also above 4%. For example, CCB Asia's requirement for new customers is a minimum deposit of HKD 100000 with a 3-month annualized interest rate of 4.1%. If the minimum deposit standard of HKD 1 million is met, it will be upgraded to a VIP wealth management customer of the bank with a 3-month annualized interest rate of 4.4%. If not upgraded, it will be 4.3%. The discount offered by ICBC Asia to new customers with a minimum deposit of HKD 100000 is a 3-month annualized interest rate of 4.2%. The annualized interest rate of the above-mentioned banks is the highest for three months, and gradually decreases for six and twelve months.

In addition, the reporter also found that some banks in Hong Kong have launched a one week high interest discount for deposit products to attract account opening. For example, between May 1st and July 31st, if a new comprehensive account is opened through ICBC Asia Mobile Banking or a branch, and two credit cards are successfully applied for and deposited with HKD 200000 per week, new customers can enjoy a total reward of HKD 500 and a fixed interest rate discount of 6.8% -8%.

In addition to Hong Kong dollar products, major banks also have dollar products with annualized interest rates ranging from 3.7% to 4.2%, and different minimum deposit requirements. Some only require $1000, while others require an equivalent amount of no less than HKD 100000 in US dollars.

Beyond financial insurance

In addition to insurance and bank wealth management, mainland investors are also increasingly interested in Hong Kong listed ETFs.

On June 28th, the 2023 Greater China ETF investor survey released by Brown Brothers Harriman Bank, a global ETF custodian and administrator company, showed an increase in demand from mainland investors for Hong Kong listed ETFs, with 69% of mainland investors purchasing Hong Kong listed ETFs through existing cross-border channels; 62% of mainland investors are interested in risk management strategies; 43% choose to invest in ESG or thematic strategies through ETFs included in the Shanghai Hong Kong Stock Connect and Shenzhen Hong Kong Stock Connect plans. The top three theme strategies favored by mainland investors are Internet/technology, ESG, digital assets/cryptocurrency. China's treasury bond bond ETF is the fixed income ETF most favored by mainland investors. 62% said they would increase their holdings in the next 12 months.

In addition, the "Cross border Wealth Management Connect" business has also ushered in a shining moment. According to data released by the Guangzhou Branch of the People's Bank of China on May 23, the funds transferred through the "Cross border Wealth Management Connect" have reached new highs for two consecutive months. Among them, the cross-border remittance amount in March reached 357 million yuan, a year-on-year increase of 1.3 times, surpassing the high of 255 million yuan in November 2022. The cross-border remittance amount in April reached 399 million yuan, a year-on-year increase of 2.6 times, reaching a new historical high.

The Guangzhou branch of the People's Bank of China analyzed that with the comprehensive resumption of personnel exchanges between mainland China and Hong Kong and Macao, 8990 new investors participated in the "Cross border Wealth Management Connect" from February to April, a year-on-year increase of 1.4 times. As of the end of April 2023, the number of individual investors participating in the Cross border Wealth Management Connect in the Guangdong Hong Kong Macao Greater Bay Area reached 50500, including 37600 Hong Kong and Macao investors and 12900 mainland investors; The "Cross border Wealth Management Connect" business between mainland China and Hong Kong has reached 14300 transactions, with cross-border remittance of funds reaching 3.034 billion yuan. The proportion of "Cross border Wealth Management Connect" business in the four cities of Guangdong is as high as 90%.

The continuous increase in the number of tourists visiting Hong Kong has driven the cross-border business of banks, and Hong Kong banks are also constantly making adjustments to their business and personnel. For example, Standard Chartered Hong Kong will continue to hire frontline personnel such as account managers, mainly those familiar with the Greater Bay Area. It is expected that the number of dedicated team members in the Greater Bay Area will double from about 50 to about 100 this year. Earlier, HSBC Hong Kong had announced that its three branches would take the lead in implementing a 7-day business week trial. The HSBC Linkage Center for Small and Medium Enterprises in the Greater Bay Area has also recently opened. HSBC stated that after the resumption of customs clearance, the number of customers visiting the HSBC Linkage Center for Small and Medium Enterprises has continued to increase, with the passenger flow of the Linkage Center for Small and Medium Enterprises in the Greater Bay Area doubling compared to before clearance.