Hong Kong regains favour as companies and investors turn to China and yuan: Deutsche Bank
Hong Kong's corporate activity and yuan-driven business have been revitalised as global market participants strengthen ties to China's economy amid tariffs and geopolitical tensions, according to a senior executive at Deutsche Bank.
Companies and investors have increased their exposure to China and hedged against the US dollar as they adjusted their supply chains and portfolios amid market volatility, said Ole Matthiessen, head of corporate banking for Asia-Pacific, Middle East and Africa, during a briefing in Hong Kong last week.
'We are seeing market participants across the corporate and institutional sectors thinking about hedging against risks' amid once-in-a-decade volatility in the foreign-exchange market, said Singapore-based Matthiessen, who is also the global head of cash management for the German lender. This volatility included significant US dollar depreciation against Asian currencies and fluctuating interest rates influenced by the economic outlook, tariffs and geopolitical tensions, he said.
'As part of that thinking, the discussion of the [yuan] as a world currency has resurfaced and grown stronger as a trend,' he said. Corporate and individual clients were keen to 'adopt a currency to keep their wealth for value preservation and risk-management reasons'.
The trend was amplified as Chinese firms accelerated their global expansion plans, further leveraging Hong Kong's financial and investment resources, he added.
Matthiessen said many corporate clients that previously retreated from Hong Kong in favour of Singapore were reconsidering their dual-hub structures. These companies – in industries such as logistics and consumer products that relied on procurement and supply chains in China – recognised 'Hong Kong's value as a connected global gateway and its direct links to mainland China', he said.
'It is a healthy trend that underscores the importance of Hong Kong in the global arena for export and import activities, particularly as mainland Chinese companies pursue their global ambitions.'
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