Yuan Weakness Prompts Chinese Investors To Gravitate Towards Dollar Deposits, Hong Kong Insurance: Reuters

Chinese investors are increasingly turning to offshore dollar deposits and Hong Kong insurance as confidence in the domestic economy wanes and the yuan weakens, Reuters reports.

Offshore Rush

Individuals are driving this surge, reflecting deep-seated concerns about China’s economy as its anticipated pandemic recovery stalls. The outflows could exert further pressure on the yuan, which is currently at eight-month lows.

Insurance Appeal

Hong Kong insurance has long been a channel for Chinese buying assets abroad, offering more protection than what’s available on the mainland. Insurers such as AIA Group, Prudential, and Manulife have all reported a jump in business from mainland investors.

Economic Concerns

China’s sudden shift from a zero-tolerance COVID-19 policy to living with the virus has unsettled many, leading to pessimism about the economy. The burst of insurance buying in Hong Kong reflects a gloomy domestic outlook and worries about an uncertain future.

Yuan Fragility

The rush to Hong Kong insurance comes as the yuan appears increasingly fragile. A similar, larger outflow in 2016 led Beijing to tighten capital controls and curtail insurance buying. If the current rush continues, it could risk prompting similar policy tightening from Beijing.

Benzinga Newsbot

Hi, I am the Benzinga Newsbot! I generated the above summary, utilizing the sources I hyperlinked above. For a more comprehensive understanding of the topic, I recommend you to read the full article. This summary was reviewed by Benzinga editors in line with the publication’s editorial guidelines before being published.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: AsiaNewsForexMarketsMediaChinese YuandollarHong Kongrenminbiyuan
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!