Easing Capital Inflows Into Mainland 'temporary'

The chief executive of the Hong Kong Monetary Authority, Eddie Yue, on Friday played down a drop in foreign capital inflows into mainland stocks and bonds this year.

Yue noted that at the end of last year, foreign holdings of equities and bonds in onshore mainland markets had more than tripled and doubled respectively in three years. He did not believe the long-term growth trend would be reversed, and described the drop this year as temporary.

"Several key drivers continue to strengthen global investors' interest in diversifying into RMB assets over the medium to long term. And these include continual inclusion of onshore equities and bonds into major global indexes, China's long-term economic growth prospects, increasing recognition of the RMB as a stable reserve currency, and... a lower correlation between RMB assets and other global financial market assets," he told the Treasury Markets Summit 2022.

Yue also said financial authorities in Hong Kong are studying the feasibility of allowing mainland investors to buy local stocks using RMB. "We are moving ahead with the necessary preparation and discussion with mainland authorities and agencies."