HONG KONG - Hong Kong investment products such as insurance and high-yield time deposits are seeing resurgent demand from wealthy Chinese mainland investors, particularly in recent months after Beijing relaxed investment rules for the "wealth connect" program in February, Hong Kong wealth managers said.

The trend is sparking a scramble among financial firms in the Hong Kong Special Administrative Region to seize the opportunity and should help the SAR burnish its status as a global wealth hub.

Under the Wealth Management Connect program, investments by mainland investors into Hong Kong and Macao hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the People’s Bank of China showed

Launched in late 2021, the Cross-boundary Wealth Management Connect program allows residents of nine cities in the southern province of Guangdong to buy investment products sold by banks in the Hong Kong and Macao SARs, while allowing residents of the two offshore centers to do the same in the mainland.

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Under the program, investments by mainland investors into Hong Kong and Macao hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the People’s Bank of China showed.

Inflows in April grew 70.5 percent from the preceding month to 22.3 billion yuan, the data showed.

HSBC, a leading wealth manager in Hong Kong, saw new account openings in the city rise by more than three times in 2023 from the pre-COVID level in 2019, driven mainly by mainland retail wealth clients, said Maggie Ng, HSBC's Hong Kong head of wealth and personal banking.

The strong momentum has continued in the first quarter of this year, she said, declining to give details.

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Apart from the mass affluent who are utilizing the cross-boundary investment channels, ultra rich people from the mainland and Southeast Asia are also exploring their options in Hong Kong, according to executives at global wealth managers.

"If we look at the inquires (from potential family office clients) that we got last year versus the previous year, we're talking about an 85 percent increase," said LH Koh, head of global family and institutional wealth APAC, at UBS.

More than 60 percent of the inquiries in Hong Kong are about setting up family office-type entities in the city by mainly mainland clients, he said, adding that the trend has continued this year.

The mainland’s tripling of the individual investment cap to 3 million yuan under the 'wealth connect' program in February bolstered inflows into the HKSAR.

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Wealth managers in the territory are pushing the authorities to further relax the investment program to meet the demand of richer clients to move larger sums to Hong Kong, industry executives said.

The Hong Kong Monetary Authority said in a statement to Reuters that it would "continue to explore further enhancement measures in due course, taking into account the industry's feedback as appropriate".

To capitalize on the momentum, some banks in Hong Kong have started offering as much as 10 percent a year interest rates on short-duration term deposits as part of the wealth link program compared to about 2 percent offered by the banks in the mainland.

Besides banks, Hong Kong-based insurers have also seen a surge in demand from mainland customers since boundary controls previously installed to curb the spread of COVID were lifted in early 2023.

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Horace Yip, Citigroup's private banking head of Hong Kong and Greater Bay Area, said the bank saw record new account openings in Hong Kong in 2023, and the momentum remained strong this year, thanks to the demand from mainland clients.