UBS: Mainland Tightens Oversight on Offshore Investment, Expects Slower Short-term New Client Growth for HK Banks

UBS published a report stating that following the China Securities Regulatory Commissions crackdown on illegal cross-border securities trading, the Hong Kong Monetary Authority has introduced additional measures for licensed institutions regarding the opening and management of investment accounts held by Mainland investors using Mainland identity documents. Hong Kong banks have therefore tightened scrutiny on new trading account openings, requiring such investors to sign declarations covering source of funds, authenticity of documents and past records, and to confirm that funds were legally obtained outside the Mainland.

Given the diversified business lines of Hong Kong banks, securities investment services for Mainland investors are expected to account for a relatively small proportion of total revenue. Local Hong Kong banks may face greater pressure than international peers, as cross-border clients contribute more significantly to their customer base. Nevertheless, existing KYC and AML requirements should help limit the overall financial impact. The broker expects new client growth to slow in the short term, as Mainland clients have been the key growth driver over the past two to three years.

UBS cited that BOC HONG KONG (02388.HK) -0.340 (-0.712%) Short selling $138.49M; Ratio 21.194% recorded over 20% YoY growth in its cross-border high-end customer base in 2025, with wealth management income rising 40%. BANK OF E ASIA (00023.HK) -0.080 (-0.580%) Short selling $1.93M; Ratio 24.339% also posted double-digit growth in its southbound cross-border customer base, assets under management and income in 2025. Although implementation details are yet to be announced, the short-term impact appears manageable.

In addition, the State Council announced new regulations on Mainland outbound investment management, which will take effect on Jul 1. UBS expects the new framework to lead to stricter reviews of outbound investments, thereby putting pressure on banks corporate banking growth, particularly businesses related to Mainland entities. The broker maintained a Neutral rating on BOC HONG KONG (02388.HK) -0.340 (-0.712%) Short selling $138.49M; Ratio 21.194% and BANK OF E ASIA (00023.HK) -0.080 (-0.580%) Short selling $1.93M; Ratio 24.339% . (ha/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-06-03 16:25.)