October 18,2010

Hong Kong: Renminbi Deposits Surge

By CSC staff, Shanghai
Renminbi deposits in the Hong Kong banking system surged by a record Rmb27 bn MoM in August, while HK$ deposits continued to grow, signaling genuine expansion in the banking sector balance sheet via further development in the offshore Renminbi business. We maintain a cautiously optimistic outlook for the economy, but the increasing circulation of Renminbi could complicate monetary management in
Hong Kong, with considerable implications for asset markets. On the other hand, the 6th Policy address delivered by the CE was dedicated to resolving social issues and addressing the discontent of the less privileged. However, the housing policies would have limited impact on property prices, in our view.
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