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Summary of GBA Investor Research Report

Core Content

The Greater Bay Area (GBA) is a rapidly growing region with a high concentration of high-net-worth (HNW) individuals and investible assets, making it a significant wealth pool for financial institutions. The report highlights the characteristics, motivations, preferences, and behaviors of GBA retail investors interested in cross-border (southbound) investments.

Main Objectives for Cross-Border Investment

GBA retail investors seek offshore investments for similar reasons as onshore ones, including:

• Return enhancement
• Risk diversification
• Globalized asset allocation

While expected returns for offshore and onshore investments are comparable, offshore investments are typically held for a longer duration.

Major Preferences for Southbound Investments

GBA retail investors show strong interest in:

• Mutual funds
• Stocks
• ETFs

They emphasize product quality as a key driver of satisfaction or dissatisfaction, while service quality is considered a hygiene factor—necessary to avoid dissatisfaction, but not a primary source of satisfaction.

Observed Behaviors and Approaches to Cross-Border Investment

Pre-Investment

• GBA investors prefer pushed communication (e.g., advertisements, TV shows) over active research.
• Sales push is the most influential factor in purchasing overseas financial products.
• Location of sales staff is not a key concern; investors are open to discussing with relationship managers in Mainland China or Hong Kong.
• In-person account opening in Hong Kong is a barrier for some, with 86% indicating they would only do so if the product is compelling.

Upon Investing

• Traditional financial institutions (banks, insurers) are the most preferred channels for purchasing foreign financial products.
• Digital wallets are also popular, but not as much as traditional institutions.
• GBA investors exhibit an opportunistic investment behavior, with only 24% interested in regular investment schemes and 3% willing to make large lump sum investments.

Post-Investment

• Value-added services such as risk warnings, portfolio analysis, and convenient customer service are highly valued.
• Investors appreciate active communication and ongoing support after making an investment.

Key Investor Segments

Several distinct segments of GBA investors have unique characteristics and needs:

1. The Wealthier (Annual income > RMB 1 million)

• Comprise ~15-20% of southbound investors.
• More experienced and knowledgeable in overseas investment.
• Prefer mutual funds over stocks.
• Show stronger interest in ETFs and foreign bank deposits.
• Have a clearer preference for offshore products over onshore with the same risk/return profile.
• Focus on risk diversification and global asset allocation.

2. Overseas Experienced (Have overseas life experience)

• Account for ~25-30% of southbound investors.
• Less reliant on pushed product information, more comfortable with online financial channels.
• More interested in regular contributions or investment schemes.
• Include retirement planning and future expenditure preparation as investment motives.

Implications for Wealth and Asset Management Players

To effectively capture and serve GBA retail investors, financial institutions should:

• Define holistic, customer-centric value propositions that cover both onshore and offshore investments.
• Differentiate from onshore and offshore products by offering unique, under-penetrated, or more sophisticated investment options such as smart beta, thematic, and ESG-themed products.
• Build seamless cross-border ecosystems through partnerships to provide a smooth customer journey from education to investment and post-investment services.

Strategic Recommendations

1. Customer-Centric Value Propositions: Focus on integrated "onshore + offshore" offerings and support services beyond traditional wealth management.
2. Differentiation Against Onshore Products: Offer products that provide unique investment exposure or are less sophisticated in the onshore market.
3. Seamless Cross-Border Ecosystems: Partner across the value chain to enhance the investor experience, including education, acquisition, and ongoing services.

By addressing these needs and behaviors, financial institutions can better position themselves to win the growing market opportunities in the GBA.