Yuan-denominated investment products popular in Hong Kong

16:03, June 24, 2010      

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With the People's Bank of China's recent actions to resume yuan exchange rate reform and expand the pilot program for cross-border yuan trade settlement, Hong Kong investors' expectations for a stronger yuan rose significantly.

Along with the growing expectations of yuan appreciation, the existing yuan-denominated investment products cannot meet the needs of Hong Kong investors anymore, and they have been trying to find new ways to benefit from the yuan revaluation. Local financial institutions unveiled various financial products one after another.

According to a recent survey conducted by CITIC Bank International, over 40 percent of Hong Kong residents are interested in or have bought yuan-denominated investment products, and around 80 percent are optimistic about the yuan's great potential for appreciation over the next two years.

The survey shows that in 2009, 37 percent of respondents had certain amounts of yuan deposited in banks, 22 percent opened yuan accounts on the Chinese mainland, 11 percent bought yuan bonds, 8 percent made property purchases on the Chinese mainland and over 6 percent invested in mutual funds which targeted China's A-share market. Although 47 percent have never made any yuan-related investments last year, 24 percent of them will consider acquiring yuan assets in the following two years.

Hong Kong investors are actively seeking new investment channels, and some have chosen to directly convert part of their Hong Kong dollars assets into yuan assets. In recent days, currency exchange has become a booming business in Shenzhen, and the number of people who opened yuan accounts and deposited money in banks near ports has also sharply increased.

Hong Kong's financial institutions have grasped this business opportunity. Banks including HSBC Holdings Plc. have raised the interest rates for yuan fixed deposits in order to attract more yuan deposits. Following banks such as BOC Hong Kong and HSBC, American International Assurance has also launched a deposit insurance scheme named "Guaranteed Fixed-rate Yuan Savings."

By People's Daily Online

(Editor:祁澍文)

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