Institutional investors widen RMB use, prefer offshore markets, HSBC say

Three in four investors expect investment use of the currency to increase.

Institutional investors are using the renminbi (RMB) more widely, with offshore RMB markets remaining their preferred way to access the currency, according to a survey commissioned by HSBC.

The survey, conducted independently by FinanceAsia, found that 87% of respondents already have access to RMB markets where, amongst them, 63% preferred offshore RMB markets, whilst 54% chose Connect schemes such as Bond Connect and Stock Connect.

HSBC said the findings highlight Hong Kong's role as an offshore RMB centre, supported by its cross-boundary market links.

Diversification was the top reason for investing in RMB assets, cited by 66% of respondents.

China's role in global trade and investment ranked second at 54%, followed by yield opportunities at 40%.

"What has shifted in recent years is that RMB market access is no longer about entry; it is about whether investors can operate seamlessly at scale," said Cheuk Wong, head of macro trading, Asia, and head of markets and securities services, Hong Kong at HSBC.

He said a deeper offshore RMB liquidity pool and the continued expansion of the Connect schemes are giving investors more options for liquidity, investment and risk management.

The survey also found that 75% of respondents expect to increase their use of RMB for investments over the next 12 to 24 months.

This was followed by hedging at 71%, settlement at 62%, cash management at 56%, and financing at 52%.

Government bonds were seen as offering the biggest opportunities, with 32% of respondents selecting the asset class. A-share equities ranked second at 24%, followed by corporate bonds at 14%.

HSBC also noted that Hong Kong is targeting the launch of five-year China Government Bond Futures in August to give international investors another tool to manage exposure to Chinese government bonds.

Looking ahead, respondents expect the strongest growth in RMB-linked capital flows to come from China-ASEAN corridors at 93%, followed by Asia-Middle East corridors at 81%.