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Financial and Monetary Affairs
Hong Kong as China's Global Financial Centre
With the continued internationalisation of the RMB and the opening up of Mainland financial markets, the currency is increasingly used in global transactions, ranging from cross-border trade and direct investment transactions to financial investment and asset management
activities.
Thanks to its deep pool of liquidity, efficient financial infrastructure and multitude of cross- border portfolio flow channels, Hong Kong continues to be the largest and most important global offshore RMB business hub, offering a wide range of RMB-denominated investment products, including listed and unlisted investment funds, insurance products, currency futures, real estate investment trusts, shares, derivatives products and bonds.
Hong Kong is the global leader in RMB financial intermediation activities. In 2018, according to statistics from the Society for Worldwide Interbank Financial Telecommunication, more than 70 per cent of global offshore RMB payment transactions were handled by Hong Kong. The city's RMB RTGS system also recorded a high volume of RMB transactions, averaging RMB1,010 billion daily during the year.
Capital Raising Centre and Global Investment Platform for Mainland
Hong Kong is the ideal centre for Mainland enterprises to raise capital. The growing presence of Mainland companies listed on the SEHK has in turn increased the breadth and depth of Hong Kong's securities and futures markets through a greater diversity of products and of constituent stocks in the equity market. Mainland enterprises also raise capital in Hong Kong through the issuance of bonds, project financing and loan syndication. Moreover, they can leverage Hong Kong's position as an international business centre and its world-class investment banking services to invest in international markets via mergers and acquisitions.
Offshore RMB Business
Hong Kong is the leading and most important offshore RMB business hub. As at the year end, the offshore RMB deposit pool in Hong Kong, including customer deposits and outstanding certificates of deposit, amounted to RMB657.7 billion, while RMB bank lending and outstanding RMB bonds stood at RMB105.6 billion and RMB170.6 billion respectively. RMB trade settlement handled by banks in Hong Kong totalled RMB4.2 trillion in 2018.
Qualified institutions develop a wide range of products investing in Mainland onshore markets via platforms such as the Renminbi Qualified Foreign Institutional Investor scheme, Stock Connect and Bond Connect. At the end of 2018, there were 36 fund management companies managing 47 SFC-authorised unlisted funds investing onshore via these channels with an aggregate NAV of RMB6.3 billion, and 33 SFC-authorised ETFs investing onshore via these channels with an aggregate NAV of RMB51.4 billion.
In November, the People's Bank of China (PBOC) issued a total of RMB20 billion bills for the first time in Hong Kong, enriching the spectrum of RMB financial products and improving the offshore RMB bond yield curve.
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