Yuan deposits, trade settlements and bond offerings in Hong Kong increased substantially in the first quarter, according to the Hong Kong Monetary Authority (HKMA).
Bankers expect the trend to continue as investors and traders try to gain from the appreciation of the currency. Yuan deposits in Hong Kong reached 451.4 billion (HK$538.99 billion) at the end of March, up 12 per cent from a month earlier and eight times the year-earlier amount, according to a paper submitted by the HKMA to the legislature yesterday.
Yuan trade settlements conducted in Hong Kong stood at 310.8 billion yuan in the first three months this year, an amount close to the 369.2 billion yuan for all of 2010.
Companies have raised a total of 18.5 billion yuan by issuing yuan-denominated bonds in the first four months in Hong Kong, compared with 35.8 billion in yuan bonds last year, according to the HKMA.
Hong Kong banks were first allowed to take yuan deposits in 2004 but they really only took off in the second half of last year, when Beijing relaxed the rules to allow more companies to conduct yuan trade settlements and issue yuan bonds, yuan shares or yuan funds. Companies that accepted the yuan from their trade settlements could deposit the currency in Hong Kong banks.
The first yuan-denominated initial public offering, Hui Xian Real Estate Investment Trust, raised 10.48 billion yuan last month. However, the share price dropped 9.35 per cent on its debut trading on April 29.
