First Read: UK Banks "Proof of concept in Hong Kong: More confidence in ..."

Research evidence excerpt

First Read: UK Banks "Proof of concept in Hong Kong: More confidence in ..."

shore savings (mainland China household deposits

$23 trillion / 120% of GDP vs US at $12 trillion, 45% of GDP) and size of addressable

customer market (HSBC estimates 70m Chinese with existing cross border needs)), iii)

increased desire by many investors for increased diversification given geopolitical

volatility, and iv) the sense that Chinese policy is supportive of increased

internationalisation of savings and and domestic financial affairs. Mention was made of

a potential 450 IPOs for Hong Kong, helpful for market depth and fees, if successful,

even if associated cashflows may make HIBOR more volatile, we think.

Internationalisation of Chinese finance and savings

We perceived a shared view that the internationalisation of the RMB and development

of a larger and more liquid Hong Kong / mainland China market for investments, debt

issuance, hedging and FX are key objectives which play to the local market's strengths

and imply substantial future growth. Evidence included i) the progress and growth

registered to date, ii) terms of the RMB internationalisation in the 15th 5 year plan 2026-

2030, iii) the broadening range of mainland China - Hong Kong facilities designed for

controlled flows to and from Hong Kong (Wealth Connect, Bond Connect, Bank

Connect, Swap Connect and so on), iv) increased demand for trade and reserve

transactions in RMB, which v) should, we think, create the conditions for a growing

market for RMB-denominated bonds and risk management derivatives.

Tokenised, well, everything

Good material on the future of money and payments advanced by both firms. Financial

assets are of course pretty much all digital already. Tokenising allows i) faster /