HK companies decrease RMB usage

HONG KONG - Hong Kong local companies decreased the usage of renminbi for payments and receivables due to their cautious outlook about the business and economy and lower expectation of renminbi appreciation, DBS Bank said in a report released on Friday.

The DBS RMB Index for VVinning Enterprises (DRIVE) edged up 0.1 point to 55.2 in the second quarter of 2013 from 55.1 in the previous quarter. The slightly higher reading of the index was due to more renminbi customer orders and trade settlement in the past 12 months by current users.

The report said companies are very cautious about the global business and economic outlook, with over half of the respondents expecting Hong Kong's general business environment to deteriorate over the next 12 months and more than half expecting their business performance to stagnate.

The cautious outlook and lower expectation of renminbi appreciations may have affected companies' appetite to use renminbi, the report said.

Chris Leung, executive director and senior economist of the Group Research at DBS Bank (Hong Kong) said the percentage of companies surveyed that used renminbi products dropped by almost half in the second quarter, from 26 percent in the first quarter to only 14 percent.

He said fewer respondents reckoned that renminbi will appreciate against the US dollars in the next 12 months, while more expected renminbi will depreciate.