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MARKETS & INVESTING | Staff Reporter, Hong Kong
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HSBC seeks larger quota for yuan bonds

This is amidst surge in the bank’s yuan deposits in Hong Kong.

A Bloomberg report quoted Justin Chan, HSBC’s deputy head of global markets in Asia Pacific, as saying, “It would be great if we can have a larger quota to invest in the onshore market. If policy makers want to develop an offshore market, they need to give offshore banks something to invest in.”

Based on data released by the Hong Kong Monetary Authority, yuan deposits in Hong Kong climbed 82% this year to a record $89 billion at the end of July. The report said, “Overseas demand for the yuan has grown, with the currency appreciating 6.7% since the central bank ended a two-year dollar peg in June 2010, the best performance among the so-called BRIC nations over the period.”

Investment in onshore bonds, according to the report, is becoming more attractive as the yield on three-year government debt climbed 53 basis points this year to 3.94% on 9 September 2011, compared with 0.83% percent on similar- maturity yuan bonds in Hong Kong.

View the report here.

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