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“Mainland clients have felt more and more insecure this year. The middle-class is the most worried, ” said Cecilia, the insurance agent. “The rich have already made plans [to put their money] in foreign countries. ”
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Mainland Chinese flock to Hong Kong for higher interest rates, financial security, amid growing economic woes
“Mainland clients have felt more and more insecure this year. The middle-class is the most worried, ” said Cecilia, an insurance agent. “The rich have already made plans [to put their money] in foreign countries. ”
by Irene Chan10:00, 3 September 202
After a journey of hundreds of miles from Henan province in north-central China, Wong arrived at a Tsim Sha Tsui branch of the Bank of China Hong Kong (BOCHK) at 5.30 am. She managed to secure first place in a queue that had grown to nearly 60 people before the bank opened its doors at 9 am.
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Like Wong, all those waiting in line on Tuesday last week spoke Mandarin and all were there for the same purpose – to open new accounts amid growing economic uncertainty in mainland China.
“We travelled with kids this summer and purchased insurance policies in Hong Kong. We had to set up a new account to transfer money from the mainland to pay our insurance fees,” Wong, in her 40s, told HKFP in Mandarin. She requested that only her surname be used.
Over the past decade, savings insurance plans in Hong Kong have been seen as a way to transfer money out of mainland China for financial safety, life protection and high interest rates. Some people pay the equivalent of hundreds of thousands of US dollars per year into such plans.
Recently, there has been a surge in mainland Chinese purchasing insurance in Hong Kong. According to the city’s Insurance Authority, new business premiums from mainland Chinese visitors in the first half of 2023 were HK$31.9 billion, around 21 per cent higher than the HK$26.3 billion in the first six months of 2019.
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“Mainland Chinese clients were setting up Hong Kong bank accounts before the pandemic. Most had also bought local insurance policies – they needed an account to pay regular fees,” Sindy said. “But recently, the motivations behind opening an account are more about asset allocation and enhancing a sense of security.”
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As a result, Hong Kong banks are seeing a growing number of mainland clients. On the Chinese social media site Xiaohongshu, the hashtag “opening new accounts in Hong Kong” has been trending, with people providing guides on the procedures at various banks.
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Hong Kong banks currently offer interest rates of around four per cent for Hong Kong dollar time deposits, while large amounts and US dollars see higher rates. In mainland China, time deposits offer less than three per cent.
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Beijing has cut interest rates three times since June to try to boost consumption, leading to a continuous depreciation of the renminbi (RMB). Interest rates in Hong Kong, whose currency is pegged to the US dollar, have risen in line with the United States.
Beijing has cut interest rates three times since June to try to boost consumption, leading to a continuous depreciation of the renminbi (RMB). Interest rates in Hong Kong, whose currency is pegged to the US dollar, have risen in line with the United States.
“Mainland clients have felt more and more insecure this year. The middle-class is the most worried, ” said Cecilia, the insurance agent. “The rich have already made plans [to put their money] in foreign countries. ”
Read the whole article here:
https://hongkongfp.com/2023/09/03/mainland-chinese-flock-to-hong-kong-for-higher-interest-rates-financial-security-amid-growing-economic-woes/
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