Emerging Markets FX Roadmap In a pickle

Research evidence excerpt

Emerging Markets FX Roadmap In a pickle

nland and in Hong Kong. In May-July

2025, total FX demand for dividend payments summed to USD24bn. The dividend distribution

this year seems a bit more “backloaded” than 2025 (ie, less payouts in May and more in June-

August; see Chart 12 and FX Snap: RMB – Dividend headwinds, 4 June 2026).

A reduction in RMB outflows

Cross-border RMB flows are becoming more volatile (Chart 13). In April, RMB outflows plunged from

RMB180bn per month on average in the past 10 months to just RMB30bn. In May, there were

actually net RMB inflows of about RMB10bn. Most of this can be explained by residents’ southbound

stock connect investments – which were very large in 2025 and early 2026 but has eased in recent

months. In fact, they actually sold Hong Kong equities in May and repatriated proceeds (Chart 14).

Going forward, there could be even more volatility and potentially net RMB inflows in the near

term, as Chinese regulators are tightening scrutiny on residents’ outward investment flows:

◆ On 22 May, China Securities Regulatory Commission issued advance notices of

administrative penalties to three major offshore brokerages for offering offshore securities

trading services to mainland investors without the required licence. Hong Kong regulators

acted in parallel, instructing local brokerages to review client onboarding controls.

◆ Bloomberg also reported on 27 May that Hong Kong banks are increasing scrutiny of

mainland clients opening savings and investment accounts, including a declaration

confirming that investment funds are lawful and sourced outside mainland China.

◆ On 1 June, China’s State Council published Order No. 837, Regulation on Outbound

Investment, effective 1 July 2026. This regulation upgrades outbound investment