Standard Chartered to offer China's rich more foreign investment choices via its global network as home markets wilt

Standard Chartered, one of Hong Kong's three currency-issuing banks, plans to strengthen its role as an international service provider in mainland China, tapping its wealthy clients' rising appetite for assets around the globe.

The emerging market-focused lender said it would facilitate Chinese capital to access markets in the Middle East and Africa amid China's consolidated economic tie-ups with the countries in those regions.

"We are considering expanding our international banking services [in China], riding piggyback on Standard Chartered's global network, particularly in the Middle East and Africa, to cater to clients' demand," said Richard Li Feng, deputy CEO of the bank's China business.

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He would not elaborate on details of the expansion plan, but said mainland clients keen on diversifying their wealth abroad would benefit from the bank's new growth strategy in 2024.

Richard Li Feng, deputy CEO of Standard Chartered China and General Manager of Personal, Private and SME Banking. Photo: Handout alt=Richard Li Feng, deputy CEO of Standard Chartered China and General Manager of Personal, Private and SME Banking. Photo: Handout>

Technically, mainland businesses and individuals are not able to deposit their money in a bank account offshore or invest directly in equities and bonds abroad.

They can opt for investment schemes such as qualified domestic institutional investor (QDII) and qualified domestic limited partner (QDLP), to allocate assets to markets outside the mainland.

These schemes, under a quota system, allow institutions to raise capital from mainland investors before converting their funds into foreign currencies for buying overseas-listed bonds and equities.

"As an international institution, we found that Chinese people still have a strong desire for allocating assets around the world," Li said. "We will create a global investment platform for the Chinese clients."

He added that increasing the QDII and QDLP quotas would be needed to better serve the high-net-worth residents.

A weak Chinese yuan, a swooning stock market and a property debacle have prompted mainland investors to buy overseas assets as they seek to hedge against domestic market risks.

Economic ties between China and the Middle East are growing with the increase in the number of investment deals following Chinese President Xi Jinping's visit to Saudi Arabia last December.

An HSBC report released in August, estimates there is an untapped trade potential of US$178 billion between China and the Middle East and North Africa region from now until 2027.

Foreign banks like Citibank and Standard Chartered are still small players in mainland China, but most of them focus on private banking businesses which seek to help the rich manage their wealth.

China has about 400 million middle-income residents and Premier Li Qiang touted the country's consumer vigour as a key growth driver for the global economy when he urged foreigners to invest while giving a speech at the China International Import Expo on November 5.

In February 2022, Standard Chartered said it would spend an additional US$300 million by 2024 to reinforce its mainland businesses, which included spending on its planned expansion of its retail branch network and on the digitalisation of its operations.

Last month, Jerry Zhang, CEO of Standard Chartered China operations, said the country's economy is on a solid footing, bolstering its confidence to invest more in the country.

"Foreign banks, with their presence around the major markets in the world, will have better chances of expanding their wealth management businesses in China now that many of the riches are avoiding domestic properties and stocks," said Ding Haifeng, a consultant at Shanghai financial advisory firm Integrity. "What they need to do is bring in a diverse portfolio of investment products to lure as many investors with different levels of risk appetite."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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