Renminbi Products
A variety of offshore Renminbi products and services is provided in Hong Kong financial market. Hong Kong, as the first offshore market launching the renminbi business in 2004, it provides an ideal platform and sophisticated financial infrastructure for the financing and asset management, reminbi deposit, trade settlement and other renminbi services to cater to the needs of businesses. 1. Renminbi Deposit
Since 2004, the Chinese government has reinforced the Hong Kong as an offshore renminbi business centre. Hong Kong is the largest renminbi liquidity pool outside Mainland China, and the gradual rise of the amount of renminbi deposit supports other renminbi businesses in Hong Kong. Between September in 2010 and September in 2010, the total amount of renminbi deposit has risen more than 300% from RMB149 billion to RMB622 billion. The rapid increase could be accounted for the poor performance of the equity market, leading to the search for another alternative investment for investors’ savings. When equity market is not doing well, RMB deposits and debt instruments could be no doubt the alternatives. Secondly, the expectation of the appreciation of renminbi has led to a rise of expected return on renminbi deposit, which increases the value of the renminbi, and it attracted more investors to deposit their money in reminbi. Comparing to the low Hong Kong dollar-deposit interest rate, which is around 0.1% because of following U.S. interest rate, Hong Kong dollar deposit became less attractive. Third, the cross border RMB trade settlement and the signing of the Supplementary Memorandum of Cooperation between the Hong Kong Monetary Authority and the People’s Bank of China on RMB business showed the determination of the support on Hong Kong’s renminbi offshore market. Owing to the exchange rate, interest rate, and the support from the Chinese