Mainland Chinese are rushing to open bank accounts in Hong Kong, buy insurance policies and investment products or swap their cash for local or US currency as the yuan slumps to the weakest since October.
The Chinese yuan has weakened this year to near the lowest level since October, and many mainland citizens are rushing to Hong Kong for safety in higher-yielding bank deposits , insurance and investment products and the US currency.
Shi from Beijing was at the Bank of China (Hong Kong) branch in the city’s tourist hotspot, Tsim Sha Tsui, at 7.30am on Friday to open a bank account. He had decided to queue there as online appointments in other branches were already fully booked. As the 9am opening time approached, more than 30 people had made a beeline for the door.
“I plan to buy insurance policies in Hong Kong for my children,” said Shi, who only wanted to be identified by his surname. “I’m also considering buying some US and Hong Kong dollars because of the recent depreciation of the yuan and rising interest rates in Hong Kong.‘’
In the same queue, Chen from Suzhou in eastern Jiangsu province said he was looking to buy an insurance policy to diversify his investments. “You should not put all assets in one basket, that is why I came here.”
China’s economic health worsened in June and July, with trade, inflation and lending declining while demand at home and abroad shrank. The country is facing a confidence crisis as its piecemeal approach to reviving growth disappointed investors, pressuring its currency.
The yuan has lost 5.4 per cent of its value against the US dollar this year and 7 per cent over the past 12 months. The offshore rate plunged to a nine-month low of 7.3451 per US dollar on Thursday, according to Reuters, while the onshore yuan hit the lowest level since November at 7.3008 per dollar.
Foreign investors have taken US$7 billion out of the onshore stock market this month, Goldman Sachs said. The Wall Street bank forecasts the yuan will weaken to 7.2 per dollar by the end of 2024, from 6.98 per dollar at end-2023, according to reports to clients this week.
