The Hong Kong Monetary Authority (HKMA) has flagged the imminent launch of a bidirectional iteration of the Wealth Management Connect initiative while forecasting an acceleration in foreign acquisitions of local renminbi assets.
HKMA said it forecasts an ongoing acceleration in the renminbi asset allocations of international investors, with a large volume of funds set to be channeled via the various initiatives to connect the financial markets of mainland China and Hong Kong.
HKMA made the remarks in its 2020 annual report released on 28 April.
According to the report the daily average renminbi transaction volume of Hong Kong’s Real Time Gross Settlement (RTGS) system hit a record high of 1.2 trillion yuan in 2020, while the offshore renminbi bond issuance volume was 58.6 billion yuan.
HKMA Chief Executive Eddie Yue said in the report that Hong Kong’s chief advantage as an international financial hub was its links and ties with mainland China, and that this will be a focal point for future work.
In 2020 the daily transaction volumes of both Shanghai-Hong Kong Connect and Shenzhen-Hong Kong Connect both more than doubled, with marked increases in both northbound and southbound transactions.
Daily transaction volume for the Bond Connect initiative surged by 82% in 2020 to hit 19.3 billion yuan, comprising 52% of the overall transaction volume for offshore investors on the Chinese interbank bond market.
The authority said that its near-term focus would be to launch a bidirectional version of the Wealth Management Connect initiative as early as possible, as well as draft a framework for undertaking southbound investment via the Bond Connect initiative.
HKMA will also work closely with mainland financial authorities to advance and implement concrete measures for cross-border financial and banking operations in the Greater Bay Area of Guangdong, Hong Kong and Macau, as well as explore more trial measures to drive the cross-border usage of the renminbi.
