Investment Immigration to Hong Kong focuses on Hong Kong's economy: With the approach of the Shanghai-Hong Kong Stock Connect, many banks in Hong Kong have launched short-term, high-interest fixed deposits to attract RMB funds. Yesterday, reporters learned that HSBC, Hang Seng Bank, and others have launched one-week RMB fixed deposit rates exceeding 6% (annualized). Such high-interest deposit campaigns generally began in late October or early November and will end before the end of the year. Experts point out that the launch of the Shanghai-Hong Kong Stock Connect will stimulate demand for RMB in Hong Kong, and it is expected that RMB deposits in Hong Kong will exceed the one trillion yuan mark by the end of the year, a year-on-year increase of 50%.
Multiple banks offer short-term interest rates exceeding 6%
Yesterday, reporters learned that many Hong Kong banks have currently launched high-interest short-term fixed deposit promotions to attract more RMB deposits. These include HSBC, Hang Seng Bank, and Citibank, with some fixed deposit rates significantly higher than the corresponding rates in mainland China. Among them, Hang Seng Bank in Hong Kong offers a one-week RMB fixed deposit rate of up to 6.38%, which is 4.72 times the corresponding rate in mainland China (1.35% for a 7-day notice deposit); the one-month fixed deposit rate is also as high as 3.4%, significantly higher than the 2.85% for a three-month fixed deposit in mainland China. In addition, HSBC's one-week RMB fixed deposit rate can also reach as high as 6.05%, with a one-month fixed deposit rate of 3.5%–3.55%. However, there are certain conditions to enjoy the preferential rates of the aforementioned two banks. For example, Hang Seng Bank requires customers to open an account at the bank and convert 20,000 HKD into RMB (for non-Hong Kong residents) to enjoy the aforementioned benefits.
“The daily quota is limited, each account can only perform this once per day, and funds renewed upon maturity cannot enjoy the preferential interest rate,” a staff member at Hang Seng Bank explained. HSBC stated that customers need to convert 20,000 to 500,000 RMB using HKD to enjoy the aforementioned preferential interest rates.
In addition, Citibank Hong Kong also stated that new RMB funds exceeding 100,000 yuan, combined with opening a stock account, can enjoy a one-month fixed deposit preferential rate of 3%; the official website of OCBC Wing Hang Bank also shows that the interest rate for a two-month RMB fixed deposit can reach 3.8%. The RMB deposit rates launched by Hong Kong banks are significantly higher than those in mainland China. Currently, the seven-day deposit rate for banks in mainland China is 1.35%, the 3-month fixed deposit rate is 2.85%, the 6-month fixed deposit rate is 3.02%, and the one-year fixed deposit rate is 3.25%–3.3%.
Intent to prepare for the Shanghai-Hong Kong Stock Connect is evident
Reporters noted that the high-interest RMB-attracting campaigns launched by Hong Kong banks have two obvious characteristics. First, they are all short-term fixed deposit promotions, such as one week or one month, while deposit rates for terms longer than 3 months remain higher in mainland China than in Hong Kong. Second, these promotional activities all began in late October or early November and will end before the end of the year.
Some foreign bank personnel pointed out that against the backdrop of interest rate liberalization, banks in Hong Kong will adjust interest rates to absorb deposits based on their own capital positions and needs, occasionally leading to high-interest competition for RMB. Currently, it appears that the intent of Hong Kong banks to compete for RMB with high interest rates to prepare for the Shanghai-Hong Kong Stock Connect is evident.
Experts predict that with the launch of the Shanghai-Hong Kong Stock Connect, the RMB capital pool in Hong Kong will grow significantly. Wing Lung Bank expects that RMB deposits could exceed 1.2 trillion yuan by the end of the year, and the RMB capital pool could reach 1.5 trillion yuan; by the end of 2015, the Hong Kong RMB capital pool is expected to reach a level of approximately 1.8 trillion to 2 trillion yuan. Liao Qun, Chief Economist at CITIC Bank International, stated that it is expected that RMB deposits will reach the 1.3 trillion yuan level by the end of this year, an increase of 50% compared to the end of last year.