Focus onInvestment Immigration to Hong Kong and monitor the trends ofHong Kong's Economy: Currently, Hong Kong holds the largest offshore Renminbi fund pool. According to documents, as of the end of October, Renminbi deposits in Hong Kong reached 943.596 billion, and when combined with certificates of deposit, the total Renminbi fund pool can reach 1.13 trillion. The Shanghai-Hong Kong Stock Connect has provided a channel for the inflow of offshore Renminbi funds to A-shares.
Moreover, the operation mechanism of the Shanghai-Hong Kong Stock Connect has greatly changed the operational state of the offshore Renminbi market in Hong Kong, while it also involves Renminbi settlement and cross-border fund allocation arrangements.
Firstly, the Shanghai-Hong Kong Stock Connect has opened up new investment channels for offshore Renminbi funds in Hong Kong. Local investors may exchange more Renminbi to allocate Renminbi assets.
Secondly, under the institutional arrangements of the Shanghai-Hong Kong Stock Connect, mainland investors can directly use Renminbi to invest in the Hong Kong market, which will increase the sources of the offshore Renminbi market's fund pool.
Thirdly, for numerous overseas investors, the Shanghai Stock Connect provides a new channel for allocating Renminbi assets. According to the relevant arrangements of the Shanghai-Hong Kong Stock Connect, overseas investors can invest in A-shares via Hong Kong. The funds from sold securities must return to the Hong Kong market, which is expected to attract a large volume of Renminbi funds from overseas to accumulate in Hong Kong, thereby expanding the size of the Renminbi fund pool in Hong Kong.
In order to meet the liquidity demands for Renminbi in the offshore market that arose after the launch of the Shanghai-Hong Kong Stock Connect, the Hong Kong Monetary Authority has been providing Renminbi daytime liquidity to recognized institutions participating in Renminbi businesses in Hong Kong since November 10, 2014, and has designated seven banks as primary liquidity providers in the offshore Renminbi market. Since November 17, 2014, the daily Renminbi exchange limit for local residents has been lifted.
At the initial stage of the Shanghai-Hong Kong Stock Connect's operation, the amount purchased via the Shanghai Stock Connect was greater than that via the Hong Kong Stock Connect, yet there has been no tension in the Renminbi funds in the Hong Kong market. The limit for individual Renminbi exchange will be lifted, removing the main obstacle to individual Renminbi business, and the development speed of individual Renminbi-related businesses in Hong Kong has obviously accelerated, while the demand for individuals holding Renminbi assets continues to rise. Considering the push effect of the Shanghai Stock Connect on Hong Kong's Renminbi business.
