RMB business opportunities for HK banking sector

The opportunities for Hong Kong's banking sector are vast, particularly in terms of the offshore renminbi (RMB) market and asset management services, Eddie Yue, deputy chief executive of the Hong Kong Monetary Authority, said Thursday.

Speaking at the Hong Kong Institute of Bankers Annual Conference, Yue believed despite the low growth and high volatility for the global economy, the coming opportunities for the Hong Kong banking industry are bright.

"The first is the offshore RMB market, which has developed rapidly over the past two years. The second is the increasing demand for asset and wealth management services, both institutional and individual," said Yue, referring to the two most promising opportunities.

In terms of the RMB business, Yue said the RMB deposit pool in Hong Kong has remained largely stable with very vibrant RMB dim-sum bond issuances and expansion in other RMB financing and investment activities.

With the mainland economy continuing to grow faster than other major economies, the incentive for individuals and institutions outside China to hold more RMB assets will get stronger, said he.

Yue said as a global hub for RMB liquidity and financing, Hong Kong is well placed to channel customer and wholesale RMB deposits toward corporations and financial institutions in the other parts of the world.

"To maintain and expand Hong Kong's role as a global RMB hub, we need to enhance our RMB business links with banks and customers in other centers," Yue said.

As for the asset management services, Yue said, currently, the portfolios of asset owners in the advanced economies are still significantly underexposed to emerging markets.

"Given the economic challenges facing the advanced economies and the growth opportunities in Asia, there is growing interest from these end-investors in increasing their investment exposure to Asia," he said, adding that this change "will generate significant demand for asset and wealth management services that Hong Kong's financial institutions are well placed to provide."