Bank wealth management firms further expand cross-border investment channels

By Our Reporter Peng Yan

Bank wealth management companies are further expanding channels to participate in global asset allocation. After the “Southbound Connect” bond investments were implemented at the end of last year by BOC Wealth Management, ICBC Wealth Management, and CMB Wealth Management, multiple institutions have recently rolled out supporting FX trading and bond investment activities.

Experts interviewed said that as both major channels—Southbound Connect and the foreign currency-to-local exchange (FX) market—are expanded in tandem, it will create a complete business closed loop for wealth management funds covering “overseas asset investment + FX risk hedging.” This can enrich the supply of wealth management products and optimize the structure of major asset classes, and will, in the long run, help drive the internationalization of the renminbi. However, it should also be noted that there are multiple real-world challenges, including weak cross-border investment research and talent reserves, and differences between compliance rules in and outside the country. These remain key issues that wealth management institutions urgently need to address to push forward global expansion.

Multiple new businesses rolled out

Bank wealth management companies’ cross-border investment business has again received a boost, with participation channels and tradable instruments continuing to expand.

Recently, BOC Wealth Management officially joined the interbank FX market, and relied on the Foreign Exchange Trading Center platform to successfully reach spot and forward transactions for USD against Swiss franc with Bank of China, becoming the first wealth management company to participate in the interbank FX market. The company said that by executing the trades through the Foreign Exchange Trading Center platform, the transaction process was electronic, significantly improving execution efficiency and standardization. It also expanded the coverage of institutional trading counterparties and enriched liquidity supply channels, providing a more efficient and flexible route for asset allocation and FX risk hedging for foreign currency wealth management products.

In addition to breakthroughs in FX trading channels, the wealth management companies’ “Southbound Connect” bond investment business has also continued to land. At the end of May, the Hong Kong branch of Bank of Communications, in coordination with the Interbank Department of its Shenzhen branch and CMB Wealth Management, successfully reached a “Southbound Connect” bond investment transaction via the Bond Connect platform. This is the first related business realized after the expansion of investment主体 for “Southbound Connect,” reflecting cooperation between banks and wealth management companies. It is understood that after expanding the scope of participating entities in “Southbound Connect,” the Hong Kong branch of Bank of Communications quickly connected with the needs of wealth management institutions and efficiently completed the business preparation and execution work.

As for market participation entities, as of May 2026, more than 260 institutions had participated in the interbank FX market, covering state-owned banks, joint-stock commercial banks, city and rural commercial banks, foreign banks, overseas banks, securities firms, and others.

Wang Pengbo, a senior financial industry analyst at Brookcon Consulting, said that by simultaneously deploying “Southbound Connect” and the FX market for foreign currency trading, wealth management companies will achieve upgrades on both the investment side and the FX hedging side. “Southbound Connect” enriches the types of offshore credit bonds and green bond assets available for allocation. The FX derivatives market constructs an “asset + currency” allocation system. In the long run, it will optimize wealth management products’ risk-return performance and reshape the offshore RMB bond market structure. By addressing the two types of qualification access, it will both open up compliant channels for taking RMB out of the country to invest in overseas bonds and allow wealth management institutions to directly trade foreign currencies within the country, effectively reducing FX conversion costs and simplifying operations. Meanwhile, it also matches FX hedging tools to provide liquidity and risk-control support for investing in USD bonds and Dim Sum bonds.

Actively participating in global asset allocation

With various cross-border tools put in place, cross-border investment by bank wealth management is moving from pilot exploration toward normalized deployment. The logic of industry asset allocation and core competitiveness is being reshaped in parallel.

Xue Hongyan, a special research fellow at SuShang Bank, told Securities Daily that falling returns in onshore fixed-income products, combined with the rollout of the Greater Bay Area financial connectivity and interconnectivity policy, has prompted wealth management institutions to increase their efforts in “Southbound Connect” and qualified domestic institutional investor (QDII) allocation. Increasing allocation to diverse overseas high-yield assets can diversify volatility in the domestic market and enhance product returns. In this industry, the core of competition is also shifting toward global macro judgment, multi-asset portfolio construction, and FX hedging capabilities. Overall, the market’s risk-resilience and resilience continue to strengthen.

Amid surging demand to “go overseas,” the wealth management industry still faces multiple real-world constraints. Lou Feipeng, a researcher at Postal Savings Bank of China, told Securities Daily that from a macro perspective, wealth management cross-border investment mainly faces four major challenges: insufficient cross-border investment research and talent reserves; FX volatility easily eroding investment returns; uncertainty in overseas geopolitical and compliance environments; and greater difficulty in managing cross-border fund liquidity. These impose higher requirements on the overall risk-control system-building of institutions.

From an implementation perspective, Xue Hongyan believes that relevant institutions need to build standardized portfolios of “overseas fixed income + FX hedging.” By relying on derivatives to lock in FX settlement and conversion risks, institutions can simultaneously build their own capabilities or coordinate with overseas institutions to make up for weaknesses in investment research. They can also use financial technology to enable direct system connectivity, and establish a cross-border compliant risk-control framework.

In addition, Lou Feipeng expects that from a medium-to-long term perspective, “Southbound Connect” and cross-border wealth management connectivity (cross-border wealth management link) will become the core channels for wealth management to “go overseas,” while foreign currency trading in the FX market will gradually become normalized.

(Editor: Qian Xiaorui)

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