Chinese investors are rushing offshore to make dollar deposits and buy Hong Kong insurance in a signal domestic confidence is languishing and that the ailing yuan faces more pressure.
A wealth manager at Noah Holdings
Savings insurance products in Hong Kong offer a minimum yield of 4.5%, he said, better than 3% offered on the mainland. He requested anonymity as he isn't authorised to speak publicly. "Offshore demand for policies denominated in Hong Kong dollars is low – U.S. dollar-denominated policies are more prevalent, to provide access to global asset allocation," said Lawrence Lam, chief executive officer at Prudential Hong Kong.
The wealth manager at Noah fears that a sustained rush into Hong Kong insurance risks inviting Beijing's policy tightening. While that makes for a possible source of a yuan rebound later in the year, according to Tan Xiaofen, professor at the School of Economics and Management of Beihang University, caution is likely to drive individual outflows ahead.
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