Hong Kong is aggressively recruiting people to manage offshore clients. The financial institutions seek to increase the number of employees by up to one-third. Currently, wealth managers such as UBS, Credit Suisse and Julius Baer have hundreds of bankers in Singapore and small teams in other locations for managing assets of clients in China and Hong Kong. Well, the reason for the spike is that Hong Kong’s new security laws. Managing the Chinese and Hong Kong offshore wealth is now a big opportunity. Hong Kong is now towards the path of massive change over. It will witness Chinese offshore activities with a blend of regional nature.
Hong Kong is getting changed and its business models are going to make dramatic changes in the coming FY-21. The 1st thing which proves our statement is that in 1997, Hong Kong generated 18% of China’s gross domestic product. Last year, it contributed fewer than 3%. The city is going to be converted into offshore well rather being and a hub for international players. The reason is none other than that China itself is becoming less reliant on the US economy.
China’s offshore syndicated loan market is also become more and more dominated by the nation’s lenders. The capitalist minds are changing in Hong Kong. China's central bank on Tuesday issued 10 billion yuan (about 1.42 billion U.S. dollars) of six-month renminbi central bank bills in Hong Kong with an interest rate of 2.21%. This means that the city is now getting flooded with local cash-flows rather overseas market. Last year of the $40.3 billion raised in Hong Kong in 2019, about $32 billion was raised by Chinese companies.
The surprising part is that the local currency is now being adopted with open heart among the international players too of Hong Kong. Central banks and funds from the United States, Europe, Asia and other countries and regions, as well as a number of international financial organizations took the funds where the bidding went up to 34 billion yuan, 3.4 times the amount in circulation.
The renminbi is enriching the portfolio of renminbi investment products which carries higher credit rating. This process will result in the development of the offshore renminbi money market and encourage other issuers to issue renminbi bonds. Once the bonds and money market improves the currency will get a significant boost up. Already it’s being found that their decline of bank deposits and also a widening of the spread between Hibor [Hong Kong interbank offered rate] and Libor [London interbank offered rate]. Both the above-mentioned things signal that liquidity is getting drained. US already against the new security and law and any battle between the both will spook flight of capital
Hence there will be significant demand for management for wealth and new products getting flooded under renminbi. Clients demand will be increasing and hence there is a significant boost up of investments. Well, Citibank Singapore has also undertaken steps to bolster its wealth management business.
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