Bank customers in Hong Kong have added 163 billion yuan (HK$197.17 billion) net of yuan savings over the past year, four times the pace of the previous year.
The last time they bought at a faster rate was in 2014, just before a surprise yuan devaluation.
The yuan scramble is being driven by factors such as speculation it will continue to strengthen after rising more than 5 percent against the US dollar over the past year.
The yuan is also in favor due to Chinese 10-year bond yields that are more than double the level of similar-maturity US Treasuries.
The buildup of yuan deposits here may get another fillip with the expected launch of the southbound leg of the Bond Connect program, which will give Chinese investors a route to buy overseas debt, and Wealth Management Connect, which will allow them to purchase investment products in the SARs.
“The launches further burnish Hong Kong’s credentials as China’s gateway, and bodes well for a future build up of yuan deposits offshore,” said Eddie Cheung at Credit Agricole in Hong Kong.”As offshore yuan deposits grow and the channels through Hong Kong are launched, then we would expect greater offshore yuan turnover.”