Mainland Chinese households are sitting on 160 trillion yuan (US$22 trillion) in cash, mostly stashed away in bank time deposits, and about a third of it could flow into stock markets in Hong Kong and elsewhere as lower interest rates fuel demand for riskier assets, according to HSBC.
Some 50 trillion yuan, deemed excess savings over the pandemic years – an amount beyond retirement needs – could soon find its way back into local and offshore equity markets as Chinese households replenish their stock holdings after trimming them over the past 15 years, strategists including Herald van der Linde, head of Asia-Pacific equity research, said in a report on Monday.
“Mainland Chinese households’ appetite for buying in Hong Kong means that low onshore interest rates are now lowering Hong Kong equity discount rates,” the bank said. “In our view, Hong Kong will increasingly be used by Chinese households as a gateway to global or regional investments.”
Chinese investors have ploughed US$80 billion in net inflows into Hong Kong stocks through the Stock Connect’s southbound channel this year, and they could funnel more of the excess savings to drive purchases to US$180 billion by the end of the year at current rate, HSBC said. Hong Kong’s appeal was also reflected in a flurry of initial public offerings (IPOs) by mainland companies in the city last quarter, the UK lender noted.
Cash and deposits made up about 70 per cent of Chinese households’ financial wealth excluding property, HSBC said. Their holdings in stocks had fallen to 10 per cent at the end of 2024 from 15 per cent in 2021 and 20 per cent in 2010, as an economic slowdown caused by the Covid-19 pandemic fanned a flight to safety.
