CHINA’S crackdown on cross-border investments is set to weigh on the lucrative businesses of banks, insurers and wealth managers in Hong Kong that tap into the riches of mainland clients and undermine the city’s standing as an offshore financial hub.
In late May, Beijing cracked down on cross-border investments and punished three online brokers for “illegally” helping Chinese investors buy shares in foreign markets, including in Hong Kong.
Analysts and financial executives say the move could in the near term weigh on money flows to Hong Kong, the preferred offshore investment venue for Chinese individuals, due to concerns about greater scrutiny of capital outflows.
Caution among the financial firms and mainland investors could weigh on sales of insurance policies, wealth management products and stock offerings in the city, they added.
Those concerns have triggered a sell-off in shares of firms including AIA, HSBC, Prudential and Standard Chartered, all of which generate a large part of their revenue from mainland investors.
In a sign of a cautious approach to activities that could be viewed as investment marketing, some Hong Kong wealth managers are limiting staff travel to mainland China and suspending client events there, people familiar with the matter said.
A Hong Kong-based salesperson at a Chinese private wealth manager who mainly promotes offshore insurance products to mainland clients said his firm had called staff back to the city after last month’s regulatory move.
Another large Chinese wealth manager has cut off referral fee payments, effectively removing key incentives that its Hong Kong unit pays onshore staff when they introduce Chinese clients to invest offshore.
“The biggest problem is that you never know how far the crackdown on cross-border capital flow can go,” said Gary Ng, senior Asia-Pacific economist at Natixis, adding that a change in the business norms can “pose risks” to Hong Kong firms.
Beijing’s move came just a couple of weeks after a research report showed that cross-border wealth booked in Hong Kong rose 10.7 percent in 2025 to $2.9 trillion, helping it overtake Switzerland as the world’s largest cross-border wealth hub.
Capital control measures
Hong Kong Financial Secretary Paul Chan on Wednesday said Beijing wanted “Hong Kong to succeed as an international financial center” when asked about the impact of the regulatory tightening.
Wealth managers, insurers and banks in Hong Kong have long benefited from the flow of capital total deposits from mainland entities have risen about 50 percent since 2023 to $237 billion, according to a Gavekal Dragonomics report.
Mainlanders are officially allowed to invest in Hong Kong via a stock and fund link, as well as a quota-based program.
A lack of strict regulatory scrutiny in recent years, however, resulted in the growing usage of brokerage apps, underground banking networks and over-invoicing exports to get their riches into Hong Kong.
While it’s not the first time Beijing has cracked down on cross-border investments, its latest efforts to bolster the domestic capital market and companies, analysts say, could result in other control measures.
In a note on Tuesday, JP Morgan said that in the future Chinese regulators may scrutinize not only cross-border money movements, but also legally earned overseas income of mainland residents, which could create a higher cost of compliance.
Mainland Chinese visitors remain a primary income driver for major insurers like AIA, with the value of new business from that cohort surging 35 percent in 2025 to constitute half of the Hong Kong unit’s newly added business.
HSBC, the biggest insurance provider in Hong Kong last year by new business premiums, on average added nearly 800,000 new bank customers annually in 2024 and 2025, with a big chunk of them being mainland visitors.
An HSBC spokesman said its bank account opening and investment services continue to operate normally, and “Hong Kong is well-positioned to capture growth opportunities across Asia.”
