ENG-2020 — Page 109

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Financial and Monetary Affairs

As the global leader in RMB financial intermediation activities, Hong Kong handles more than 70 per cent of global offshore RMB payments in recent years". In 2020, Hong Kong maintained its lead as the largest offshore RMB forex market. Its RMB RTGS system recorded RMB1,192 billion of transactions on average daily.

Offshore RMB Business

At the year end, the offshore RMB deposit pool, including customer deposits and outstanding certificates of deposit, amounted to RMB757 billion, while RMB bank lending and outstanding RMB bonds stood at RMB152.1 billion and RMB182 billion respectively. RMB trade settlement handled by banks in Hong Kong totalled RMB6.3 trillion in 2020.

Qualified institutions develop a wide range of products investing in Mainland onshore markets. via platforms such as the RMB Qualified Foreign Institutional Investor scheme, Stock Connect, Bond Connect and China Interbank Bond Market.

The Ministry of Finance has issued RMB sovereign bonds in Hong Kong for 12 consecutive years since 2009, including RMB15 billion of bonds issued in 2020. The People's Bank of China (PBOC) issued RMB bills for the first time in Hong Kong in 2018 and has since established a regular mechanism of central bank bill issuances in Hong Kong to enrich the city's spectrum of RMB financial products, thereby promoting RMB internationalisation. In 2020, RMB155 billion of bills were issued.

Stock Connect

Under the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, international investors can trade in over 570 shares and over 880 shares listed on the Shanghai and Shenzhen stock exchanges respectively. Mainland investors also get to choose from over 490 Hong Kong-listed stocks.

From 28 December, pre-revenue/pre-profit biotechnology companies listed in Hong Kong can be included as eligible securities under the southbound trading of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect upon fulfilment of certain criteria. The SFC worked with the China Securities Regulatory Commission to implement an investor identification regime for southbound trading under Stock Connect on 13 January.

Bond Connect

Northbound trading under Bond Connect has been growing steadily since its launch in July 2017. In 2020, average daily turnover reached RMB19.3 billion, up 82 per cent from 2019.

Guangdong-Hong Kong-Macao Greater Bay Area (GBA)

The Outline Development Plan for the GBA confirms and supports Hong Kong's status as an international financial centre, a global offshore RMB business hub, and an international asset and risk management centre. It also supports the development of Hong Kong into a green finance centre and a platform for investment and financing serving the Belt and Road Initiative.

13 Figures are quoted from the Society for Worldwide Interbank Financial Telecommunication.

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