Hong Kong can be a crucial partner in the continued and orderly opening of mainland China’s capital markets, particularly in advancing the internationalisation of its currency, according to HSBC’s co-CEO.
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As a financial hub connecting East and West, Hong Kong “can play a key role in promoting the yuan’s internationalisation by expanding its offshore liquidity while maintaining strong safeguards and effective risk management,” said David Liao, the lender’s co-CEO for Asia and the Middle East, at the Caixin Summer Summit in Hong Kong on Friday.
According to an HSBC survey, 81 per cent of mainland businesses said they planned to expand overseas, while both institutional and retail investors intended to diversify their portfolios by allocating assets abroad. At the same time, overseas companies were increasing their investment in and trade with China.
“When it comes to choosing financing channels and locations, Hong Kong is often the top choice,” Liao said.
Hong Kong could further scale up yuan-denominated trade finance, he said.
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In January, the People’s Bank of China and the Hong Kong Monetary Authority launched a 100 billion yuan (US$13.6 billion) liquidity facility, enabling banks to help their clients obtain funding to support trade.
Liao said the yuan was now the third most used currency for global trade finance, after the US dollar and the euro, but accounted for just 6.15 per cent of the total.