Hong Kong to continue capitalising on ‘dim sum’ bond and loan opportunities after offshore yuan debt grew exponentially in 2023, regulators say

Use of the yuan in cross-border trade and investment has been gaining traction in recent years, HKMA executive director Kenneth Hui tells Global Loan Market Summit

‘Being the world’s largest offshore yuan hub, we strive to make good use of our distinctive strengths’: Secretary for Financial Services and the Treasury Christopher Hui

2-MIN READ2-MIN

Last year, dim sum bonds issued in Hong Kong increased by 65 per cent to 550 billion yuan compared to a year earlier, while the total outstanding yuan loan figure rose 130 per cent year on year to 441 billion yuan, Kenneth Hui says. Photo: Getty Images

Published: 7:33pm, 20 Feb 2024

Hong Kong is set to continue capitalising on offshore yuan funding opportunities after “dim sum” bonds and loans – offshore debt denominated in the yuan – grew exponentially in 2023, regulators said.

Last year, dim sum bonds issued in Hong Kong increased by 65 per cent to 550 billion yuan (US$76 billion) compared to a year earlier, while the total outstanding yuan loan figure rose 130 per cent year on year to 441 billion yuan, Kenneth Hui, executive director at the Hong Kong Monetary Authority (HKMA), said in a keynote speech at the Global Loan Market Summit in Hong Kong on Tuesday.

Borrowers and issuers have increasingly opted for local currency financing to mitigate foreign-exchange risks and to diversify rather than to rely on foreign currency, he said.

“In this context, we see that the use of yuan in cross-border trade and investment has been gaining traction in recent years,” Hui said.

The gradual opening up of the mainland Chinese capital market, which can provide more yuan-denominated assets for international investors, and cheaper funding costs in the yuan compared with the US dollar, due to several interest rate hikes by the Federal Reserve since March 2022, were behind this growth, he added.

Hong Kong is uniquely positioned to support offshore yuan needs, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told the conference.