Hong Kong: China CITIC Bank International Limited announced that the CNCBI Cross-border Banking Demand Index rises 0.7 over the last quarter in 2014 to 5.89.
CNCBI Chief Economist and General Manager of Research Department Dr. Liao Qun points out that the 0.9 increase of the Corporate Demand Index to 57.6 indicates an acceleration of cross-border banking demand from mainland corporations. The increasing demand for financing is particularly notable. The sub-index of loans rises through the ranks from last quarter’s third with an increase of 2.2 to 61.6. In fact, loan demand has been rising for 2 consecutive quarters, which is indicative of a growing demand from mainland corporations for cross-border loans. The sub-index of trade finance also increases by 2.7 to 56.8 while the sub-index of structured finance rises 1.1 to 55.8. Financing demand is strong overall.
The first quarter of 2015 rise in cross-border banking demand, especially for financing, is attributable initially to the faster “going out” pace of mainland corporations. For the first 10 months in 2014, mainland China’s outbound direct investment surged 17.8%, Dr. Liao explains.
He notes that such investment requires the support of overseas financing. This naturally boosts mainland corporations’ demand for loans and structured finance services from banks in Hong Kong. In the meantime, central government’s stronger determination to sustain growth also raises mainland corporations’ anticipation of financing demand. Notable improvement to the financing difficulty faced by mainland corporations, especially SMEs, is unlikely for the short term. Demand for financing is increasingly diverted to Hong Kong. The rebound of mainland exports since mid-2014 also provides a further boost to corporate demand for financing.
