Putting savings into yuan

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  1. #1

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    Putting savings into yuan

    Hi guys. With the supposed coming collapse of the US$, I have a few questions about stashing my HK$ savings in a yuan account. I have a few hundred thousand and hope to leave HK in a year or two, so I really want to maintain my savings' value in the medium term.

    1) Is it likely the yuan will continue to appreciate?

    2) Are there limits on how much yuan I can hold in a savings account with HSBC?

    3) Are there limits on the amount of yuan I can buy/transfer into the account?

    4) Given that I won't need to access the savings for a while, is a cash deposit a better idea? Any recommendations?



    Naturally I'll be paying you 5% as my financial advisers.


  2. #2

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    Quote Originally Posted by Sigga:
    Hi guys. With the supposed coming collapse of the US$, I have a few questions about stashing my HK$ savings in a yuan account. I have a few hundred thousand and hope to leave HK in a year or two, so I really want to maintain my savings' value in the medium term.

    1) Is it likely the yuan will continue to appreciate?

    2) Are there limits on how much yuan I can hold in a savings account with HSBC?

    3) Are there limits on the amount of yuan I can buy/transfer into the account?

    4) Given that I won't need to access the savings for a while, is a cash deposit a better idea? Any recommendations?



    Naturally I'll be paying you 5% as my financial advisers.
    Let's put the crystal ball aside, here are the rules:
    If you have a HKID and only then you can open a RMB account in Hong Kong.
    You can change 20k RMB per day. Ther is no limit of how much you can have in the account.
    But the interest is less than one percent (I am not exactly sure, but believe it must be around 0.5-0.7%).
    There is another way: You can open another RMB account in HSBC Shenzhen. The you can transfer 80K RMB per day to China into a special HK-Resident RMB account. The balance there can at any given day be transferred back to HK. If you make a 5 Year time deposit in China you will get 5.85% interest (minus 5% tax).

    If you deposit 500K RMB there you can get the premier status which is also valid for Hong Kong (Where you normally woud need 1 mio HK$).
    Last edited by hktraveller; 07-10-2008 at 02:21 PM.

  3. #3

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    Thanks.

    How much is the interest rate for a shorter time deposit (e.g. 1 month, 6 months)? 5 years really looks long, since the stock market is expected (by me) to rebound in a year or so.

    If you buy bonds in RMB at BOCHK you get a bit over 3% and can sell any time.


  4. #4

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    And the money back?

    One question is also.. how do you get the money back after?

    It seems to me that it's very complicated to move capitals from China?

    If $ is going down, then maybe a good option is to switch to euros? Standards savings account in Europe have 4% interest rate! (ING Direct...)

    But then again... What about the crystal ball..


  5. #5

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    Quote Originally Posted by psjylife:
    One question is also.. how do you get the money back after?

    It seems to me that it's very complicated to move capitals from China?

    If $ is going down, then maybe a good option is to switch to euros? Standards savings account in Europe have 4% interest rate! (ING Direct...)

    But then again... What about the crystal ball..
    If you have this special HK resident RMB account you can wire them back to HK any amount any time.

    All available time deposits:
    3 months: 3.33%
    6 months: 3.78%
    12 months: 4.14%
    24 months: 4.68%
    36 months: 5.40%
    60 months: 5.85%
    minimum deposit: 50 RMB

    savings or current account: 0.72%, no minimum.

    Call deposit, min 50k RMB: 1.71%

    All interest payments are subject to a 5% withholding tax.

    If you want to make a Euro time deposit, be quick, they are talking about cutting interest rates.
    Last edited by hktraveller; 07-10-2008 at 04:31 PM.

  6. #6

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    Quote Originally Posted by pinko:
    If you buy bonds in RMB at BOCHK you get a bit over 3% and can sell any time.
    Remember that the yield is not the same as the coupon: the purchase price of the bonds can go up or down. Held to maturity the yield on Chinese bank bonds tends to be about 1.5% I think.

  7. #7

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    Thanks HKtraveller!

    Quote Originally Posted by PDLM:
    Remember that the yield is not the same as the coupon: the purchase price of the bonds can go up or down. Held to maturity the yield on Chinese bank bonds tends to be about 1.5% I think.
    3.4% with BOC and another one. 3.25% with one more bank. So much higher than 1.5%.
    Last edited by pinko; 08-10-2008 at 09:54 AM.

  8. #8

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    I think you will find that 3.25% and 3.4% are the coupons on the bond. If you don't understand the difference between "coupon" and "yield" thaen I respectfully suggest that you shouldn't be investing in bonds.

    The thing that's going to surprise you is that the price of RMB100 worth of bonds is not RMB100.


  9. #9

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    Quote Originally Posted by PDLM:
    I think you will find that 3.25% and 3.4% are the coupons on the bond. If you don't understand the difference between "coupon" and "yield" thaen I respectfully suggest that you shouldn't be investing in bonds.

    The thing that's going to surprise you is that the price of RMB100 worth of bonds is not RMB100.
    The bonds are sold at 100.8% of their face value, so the yield is much higher than 1.5%.

    If you don't know what you are talking about, then I respectfully suggest that you stop talking (and losing yours and your bank's customers' money).

  10. #10

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    I know exactly what I'm talking about. And I don't work for a bank.

    At a sale price of 1.008 and a coupon of 3.25% and a maturity of, say, 3 years then the yield is 2.96%. But frankly I'd be surprised if they are not a shorter maturity than that.

    And if you're going to sell them then you'll need to take account of the spread as well (on trading through HSBC that tends to be around 0.5%).

    RMB Bonds currently available from HSBC include:

    Bank of China 3.15% (28Sep2009) with an indicative price of 101.5, so a yield of 1.57%
    China Development Bank 3% (13Jul2009) with an indicative price of 101.45, a yield of 1.05%

    Granted that some longer terms bonds may give higher yields, but not by a great deal.

    Last edited by PDLM; 08-10-2008 at 11:37 AM.

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