Financial Secretary Paul Chan on Wednesday said legitimate capital flows to the SAR from the mainland are still encouraged, despite the latest regulatory actions by Beijing to tighten cross-border capital outflows.

Chan made the remarks at the Bloomberg Invest 2026 event in Admiralty where he stressed the latest crackdowns on certain brokerages were mainly because they had moved their client's funds through illegal means.

"The central authorities are very supportive of Hong Kong — they want Hong Kong to succeed as an international financial centre, there's no doubt about it," he said.

"The recent crackdown [was] mainly on those people who moved their funds to Hong Kong for different investments — not through legitimate means.

"If the capital inflow [is done] in the proper channel, they are still encouraged," Chan added.

He also said officials from Beijing and the SAR were working to further expand the investment quota for individuals through the Greater Bay Area (GBA) cross-boundary Wealth Management Connect scheme, and to diversify the range of products that GBA investors can invest in.

When asked about reports that certain SAR lenders had suspended some of the offshore investment accounts for their mainland customers at their mainland branches, Chan noted that "different banks have different practices".

"But I guess for the banks, as the mainland market is growing in affluence, [investors have also grown] their aspirations to have certain assets allocated offshore. But this must be through proper means," he said.

"I do think when we put them into proper channels, we can inspire the confidence of the mainland authorities about the unwarranted leakage of foreign exchange reserves, then with that trust we can move forward on a more sustainable basis," he added.

He also believes the city's investment products remain "attractive" and that interest in offshore asset allocation by mainland investors would remain, which would serve as a strong driver for the city's financial services sector.

To better facilitate legitimate cross-boundary fund flows, the finance minister also said officials from both sides were studying the feasibility of setting up a dedicated organisation to manage cross-boundary client services.

The remarks came after the Hong Kong Monetary Authority last month instructed banks to require customers to declare that funds used in investment accounts had originated from outside the mainland, amid Beijing's tightened capital controls.

Two days ago, the country's securities regulators also said in a statement that the country's regulatory actions on "illegal" cross-border investment wouldn't lead to mainlanders' offshore accounts being closed and assets liquidated, amid concerns over the fate of the US$54 billion worth of assets. (Additional reporting by Reuters)



Edited by Tony Sabine