Strengthen the Capital Market Magnetism of Hong Kong

Along with the signing of new 3-year Currency Exchange Agreement between PCB and Hong Kong Monetary Authority, the scale of currency exchange has been broaden from original 200 billion RMB (227 billion HKD) to 400 billion RMB (490 billion HKD). This agreement is beneficial for Hong Kong to promote the offshore RMB market and for China to promote RMB internationalization, as well as enhance the standard of Hong Kong international financial centre and provide more extensive capital market for enterprises financing.

New Agreement of Currency Exchange accelerates the construction of Hong Kong offshore market

As the scale expanding of currency exchange between Hong Kong and China, it further strengthens the status of Hong Kong financial centre, increases the fluidity and enables Hong Kong to have enough flowing capital to maintain the stable of RMB market. Junhua Zeng, the Financial Secretary, said that this agreement provides more space for RMB developing in Hong Kong and helps to consolidate Hong Kong as the business centre of offshore RMB.

With the scale expansion of currency exchange, many Hong Kong banks, including Bank of East Asia, Bank of Communications and Development Bank of Singapore promote deferral rate preferential benefit to attract more RMB deposits. Bank of China (Hong Kong) Limited expressed to provide 1.3% and 1.4% annual interest rate preferential benefit separately to 3 months and 8 months fixed deposit of RMB.


As shown in Hong Kong Financial Department, RMB deposit in Hong Kong has increased double to 622 billion RMB in the first half year of 2011, and the amount of RMB through Hong Kong Bank settlement has surpassed 13000000 billion. After the signing of new agreement of new currency exchange, will accelerate the development of Hong Kong offshore RMB business.

Increasing the willingness of enterprises to finance in Hong Kong

The scale of currency exchange has increased to 400 billion RMB which means the compatibility strengthen unceasingly between China mainland and Hong Kong, frequent interaction of trade and investment, broaden and deepen of financial cooperation field. At the same time, due to the advantages of currency exchange with reducing fund raising cost, meeting more financial needs and avoiding the risk of exchange rate, the magnetism of Hong Kong capital market will be strengthened day by day.

Under the promotion of currency exchange scale and preferential rate of banks, Hong Kong will have more RMB deposits to become the centre for oversea enterprises to gather RMB fund. Meanwhile, global enterprises will pay more attention to take avail of Hong Kong as an open platform to gain more financing funds for foreign development. Currently, many enterprises set up Hong Kong Company or office, open Hong Kong Bank account, which can be regarded as paving the way for other markets and accelerating the flowing of funds.

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