As Li said, with the development of the offshore renminbi market on the fast track since the beginning of 2011, renminbi deposits will reach a substantial amount, pushing the growth of Hong Kong's offshore renminbi business.
At this stage, the market will begin to see a visible accumulation of renminbi liquidity, with growth in the range of products, the scale and yield profiles. Trading in the secondary market will also become more active. Products in two key areas will be worth watching: trade finance and exchange traded products.
High-yield products will effectively attract more offshore investors to accept and use the renminbi, who will then invest the currency back into the Hong Kong market, thus increasing the renminbi liquidity in Hong Kong.
Li said the renminbi business expansion will directly benefit the brokers and stock exchanges, as well as Hong Kong's overall economy.
The Chief Economist of Deutsche Bank Greater China, Jun Ma, expects the value of renminbi assets in Hong Kong to reach 700 billion yuan in 2012, when the average rate of return of renminbi products will post a noticeable increase.
Li estimates the scale of Hong Kong's offshore renminbi market will exceed 2 trillion renminbi in the near future."This is a business opportunity calculated in trillions," he said.
The offshore renminbi market will grow bigger and bigger and not only Hong Kong wants to get a piece of the cake. The renminbi business in Singapore has been growing fast, with banks preparing for the offshore renminbi-denominated bond products.
Other financial centers such as London, are also keeping a close eye on the renminbi pie. Mayor of the City of London Alderman Bear said in Shanghai in mid-April that they aim to be another offshore renminbi center as soon as possible.
"Developing several offshore trading centers can help to enlarge the renminbi market," he said.
Li said Hong Kong should further invest in IT infrastructure and develop new asset classes and capabilities.
"Investing is like building a road, something you have to do to get the traffic," Li said. "You cannot wait for the traffic before acting."
The authors are with Xinhua News Agency.
(China Daily 05/04/2011 page8)
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