The thirst for yuan assets seems to be unquenchable according to a survey which indicates that 53 percent of the city's wealthy residents hold yuan deposits and nearly a half plan to accumulate even more in the second half.

Meanwhile, 51 percent of Hong Kong's richest 10 percent of the population currently holds yuan investments while 31 percent of respondents from the city indicated plans to make yuan investments in the second half in 2011, the HSBC Affluent Asian Tracker released on Tuesday shows.

Bruno Lee, regional head of wealth management for HSBC in Asia-Pacific, said that investment related to the gradual appreciation of the yuan has become an increasingly important part of Hong Kong's wealth creation.

The wish of Hong Kong people to hold more yuan deposits is clearly encouraging alongside their growing appetite for yuan investment products, Lee said during a media briefing on Tuesday.

It compares with a similar survey released by the bank in July 2010, which at that time concluded the number of local wealthy people who hold yuan investments was still less than a quarter.

Kevin Lai, an economist at Daiwa Capital Markets, said the yuan's offshore market development in Hong Kong has witnessed tremendous improvement over the past year, driven by the yuan's appreciation and a series of favorable policies that spurred investors as well as some enterprises to hold more yuan deposits and investments.

"With the yuan gaining 4 to 5 percent against the Hong Kong dollar last year plus the 1 to 2 percent interest from the bank, the aggregated returns on yuan deposits outperformed a great number of other investment tools given the recent global economy and sluggish stock markets," Lai told China Daily.

The rapid rise of the offshore yuan has taken the world by surprise as in little more than a year since its introduction in July 2010, it has become the fastest growing currency market, Daniel Hui, senior foreign exchange strategist on the offshore RMB with HSBC, wrote in an email note on Tuesday.

Yuan deposits in Hong Kong have grown by over 250 billion yuan in the same period and now account for nearly 10 percent of all deposits in Hong Kong, displacing other more traditional choices of overseas currency deposits like the US dollar and the euro, Hui wrote.

The HSBC study released Tuesday examined the top 10 percentile of the population by average liquid assets and mortgage value in eight regional markets, including the mainland, Hong Kong and Taiwan.

People in Hong Kong qualified for the survey held on average $315,116 in liquid assets, the highest among all the economies. Those from the mainland and Taiwan possessed an average of $159,253 and $156,936, respectively.

More than a quarter of wealthy Asians plan to invest in greater China and Southeast Asian funds and equities in the next six months, the report shows.

"Despite the recent market volatility and rather unclear economic condition, Asia remains robust in terms of growth potential. Affluent investors will continue to look to the region for wealth opportunities," Lee explained.

litao@chinadailyhk.com

China Daily

(HK Edition 09/21/2011 page2)