Hong Kong seeks to quell fears of asset bubbles (5)

The bottoming-out of economic growth in the Chinese mainland also adds to market optimism. In annualized terms, GDP grew 9.1 percent, well above the 7.5 percent annual growth target, providing a clear sign that the growth slump on the mainland has passed.

Leung Fung-yee, however, said the size of the yuan market in Hong Kong is not yet big and diversified enough for any serious bets.

"Most of the yuan products in Hong Hong are cash market products, such as bonds and ETFs. They are not as good a speculation target as those in the futures market," she said.

Futures are better betting tools than cash market products because they allow leverage. In some cases, leverage can be as high as 100 times, meaning that an investor can invest 100 yuan with just 1 yuan in hand.

The band of yuan products in Hong Kong has widened substantially in recent years along with the growth of yuan deposits, which stood at 545.7 billion yuan at the end of September. But the market size is still small in real terms.

For now, the "dim-sum" bond is the major yuan product in Hong Kong. The Hong Kong Stock Exchange rolled out the first yuan futures in September, the deliverable yuan futures, but trading volume has been lackluster.

The mainland would be a much better place to take bets on yuan assets. But experts' views differ on whether the funds will find their way into the mainland.

Yi Xianrong, a researcher at the Institute of Finance and Banking of the Chinese Academy of Social Sciences, said it's unlikely that the funds will flow into the mainland in quantity.

"Both the property market and stock market have shown no signs of a rally. And the central bank has a rigorous set of systems to control 'hot money', so it's hard for them to come, bet and go," he said.

But Li Youhuan, who studies "hot money" and is the director-general of the Centre of Guangdong Social Science for Integrated Research and Development, said that inflows to the mainland have already started, though it's still hard to tell which assets they are betting on.

Li closely follows more than 100 underground banks. He has found that the banks have been increasing their positions in the mainland. Money has been flowing into the banks since September and accelerated in October.

"The trend has been in place where 'hot money' accelerates its flow into the mainland markets," Li said

Contact the writer at gaochangxin@chinadaily.com.cn

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