HSBC Thailand expects higher demand for yuan borrowing from large Thai corporates, in line with positive growth of cross-border trade and investment between Thailand, China and Hong Kong.
Normally Thai corporate clients borrow in baht.
The growth of cross-border trade and investment between Thailand and China, including Hong Kong, means financial settlement in yuan should provide more convenience for trading partners, said the bank.
As a result, demand for yuan borrowing from both loan and bond markets should increase, said Giorgio Gamba, chief executive of HSBC Thailand.
Given global connectivity and a high level of investment expertise, the bank is ready to support Thai corporate clients in yuan borrowing, said Mr Gamba.
With positive yuan liquidity in Hong Kong, Thai corporates can access fresh funds in the offshore currency at reasonable prices, he said.
This opens up more options and opportunities for fund mobilisation, said Mr Gamba.
According to the Finance Ministry, the Thai government also plans to issue bonds in foreign currencies, particularly the US dollar, yuan and yen to create a benchmark for companies that want to raise funds overseas.
This would be the first time such bonds have been issued in foreign currency denominations in 20 years.
The yuan ranks second globally in terms of international trade settlement, and exposure has been rising in accordance with the growth of Chinese trade across the world. This has resulted in higher demand for yuan settlement, Mr Gamba said.
He said cross-border payment and settlement between Thailand and Hong Kong via digital channels is expected to grow in the future under a collaboration between authorities on innovative payment.
The Hong Kong Monetary Authority and the Bank of Thailand launched the Faster Payment System x PromptPay Link for cross-border QR payment between Hong Kong and Thailand in December last year.
This initiative provides a fast, secure and accessible cross-border retail payment service for people travelling between Hong Kong and Thailand, with HSBC Hong Kong and Bangkok Bank acting as the banks responsible for cross-border settlements.
Thailand's foreign direct investment (FDI) grew last year, while investment from China topped the FDI value rankings in 2022.
Luanne Lim, chief executive of HSBC Hong Kong, said cross-border trade and investment between Thailand, China and Hong Kong increased.
Thailand's inbound investment is mainly for the automotive industry, in particular electric vehicle production, as well as the renewable energy, property and manufacturing sectors.
Thailand's outbound investment is mainly from the retail sector, especially consumption-related businesses and the manufacturing industry.