Renminbi Internationalisation The Journey Begins

Size: px
Start display at page:

Download "Renminbi Internationalisation The Journey Begins"

Transcription

1 Treasury Division Renminbi Monitor January 2013 Joanne Yim Chief Economist Renminbi Internationalisation The Journey Begins After decades of rapid growth, mainland China has become the second-largest economy in the world, after the US. Despite the Mainland s growing economic dominance, the Chinese renminbi (RMB) remains underutilised internationally. However, this situation is slowly changing, due largely to the Mainland s strategy to promote the use of the RMB beyond its borders. There has been increasing international acceptance of the RMB as a trade settlement and investment currency. Some central banks have also started to add RMB-denominated securities to their foreign exchange reserves. Going forward, more policies are likely to be launched to facilitate the expansion of the RMB offshore market and to overcome the currency s limited convertibility. These may include measures to allow more two-way cross-border flows and two-way fluctuations of the RMB against other major currencies, as well as identifying more offshore and onshore cities for pilot RMB trading activities. As a Chinese city with special administrative status and a first-mover in the development of offshore RMB financial markets, Hong Kong stands to benefit greatly from the growing internationalisation of the RMB. The RMB exchange rate is expected to strengthen slightly in The USD/RMB midpoint rate set by the People s Bank of China (PBOC) is likely to be near 6.20 by the end of 2013, representing an appreciation of 1.4% for the RMB compared with the end of The Mainland authorities could also widen the daily trading band for the USD/ RMB exchange rate to 1.5% to 2%, from the current 1%. With economic growth on the Mainland stabilising and sentiment in the housing market expected to improve, there is likely to be less pressure on the PBOC to further ease monetary policy in The benchmark lending rates are expected to remain unchanged during the year, with the one-year lending rate held at 6%. Looking further ahead, Hong Kong s offshore RMB deposits, excluding Certificate of Deposits (CDs), could account for over 25% of total deposits in Hong Kong by 2015, from less than 10% at the end of This would make RMB deposits the secondlargest source of deposits in Hong Kong, replacing the position long held by US dollar deposits. The Chinese government has been taking steps to expand the use of the RMB outside the Mainland s borders. Its efforts are gradually paying off. The RMB is slowly gaining acceptance as a global trade settlement currency. It is also being more widely recognised as an international investment currency and the range of offshore RMB products has expanded to include deposits, bonds, equities, funds, derivatives, etc. A few countries have started to include the RMB in their foreign exchange reserves a small step towards making the RMB a reserve currency. But while the journey to internationalise the RMB has begun, there is still a long way to go before the RMB becomes a truly global currency capable of challenging the US dollar s dominant status. The Mainland authorities look likely to maintain their twopronged approach for accelerating the process of RMB internationalisation that is, they will continue to promote offshore RMB business in more financial centres, both inside and outside of the Mainland and to implement policies to reform the country s financial markets and open up capital accounts.

2 A unique strategy: Push for internationalisation before full currency convertibility The usual path for currency reform is to first achieve full convertibility and then aim at some degree of internationalisation, if at all. For example, the US dollar became convertible into gold in 1900 but it only replaced the British pound to become the dominant currency in the global economy during the 1920s. Today, the US dollar is the most-traded currency in foreign exchange markets around the world, accounting for about 85% of total transactions, according to the Bank of International Settlement s most recent Triennial Central Bank Survey. In addition, the International Monetary Fund reports that around 60% of international reserves are denominated in US dollars. There are also examples of currencies that are fully convertible but not internationalised. Such currencies include the Japanese yen and the Hong Kong dollar. The former became fully convertible in the 1980s, after its government lifted all restrictions on capital account transactions. However, the yen is far from being internationalised despite the fact that Japan was the second-largest economy in the world during the latter part of the last century. Similarly, the Hong Kong dollar is fully convertible but is hardly used outside Hong Kong. Reasons for RMB internationalisation There are two main factors behind the Chinese government s decision to embark on this journey of RMB internationalisation. First, there is a growing feeling that the Mainland should have a currency that reflects its rising global economic dominance. Second, international use of the RMB will enable China to reduce its reliance on the US dollar for trade and other purposes, making the country less vulnerable to fluctuations in the US currency. Growing economic power but underutilised currency After three decades of rapid economic growth, in the second quarter of 2010 the Mainland overtook Japan to become the second-largest economy in the world. Japan had held the number-two spot since The Mainland s economy was valued at about USD7.5 trillion in Depending on the calculation methodology used, this accounted for between 10% and 14% of 2011 world GDP. In terms of contribution to growth, the Mainland economy is even more important due to its relatively faster pace of expansion as compared with other leading economies, and in the past decade, it has accounted for about one-quarter of world GDP growth. For the RMB, the Chinese government seems to have chosen a different path. The Chinese currency achieved current account convertibility in the 1990s, and mainland importers and exporters are able to purchase or sell foreign currency for RMB for trade purposes. But there are still restrictions on capital flows, particularly short-term flows, and the RMB is not yet fully convertible. However, the Mainland authorities have been actively promoting the use of the RMB outside the Mainland mainly in Hong Kong, Singapore, Taiwan and London. It seems that the authorities are trying to gradually internationalise the RMB before it becomes fully convertible. Gross Domestic Product in Current Prices USD trillion Mainland China Japan US 2

3 GDP Share of World Total in 2011 Mainland China s Foreign Exchange Reserves 21.6% % 10.4% USD trillion % 0.5 US Mainland China Japan Rest of the World The Mainland s growing importance is reflected in its position as the world s largest exporter (replacing Germany in 2009), accounting for about 11% of world exports and 9% of world imports in The Mainland also has the world s biggest foreign exchange reserves, amounting to USD3.3 trillion as at the end of Mainland China s Share of World Exports and Imports % Mainland s Share of World Exports Mainland s Share of World Imports But despite this central role in the global economy, a large proportion of payments in and out of the Mainland is not in RMB but in US dollars. This is in sharp contrast to the US, where more than 90% of payments in and out of the country are in its domestic currency. November 2012 estimates from SWIFT show that the RMB ranked just 14th in terms of the world s most-used payment currencies, with a 0.56% share in terms of payments value. In the foreign exchange market, the RMB is also under-represented when compared to the size of the Mainland economy. SWIFT estimates that the RMB had a world market share of only 0.9% in foreign exchange value in June 2011 but a world GDP share of 10.4% in Under-representation of RMB in Foreign Exchange Value Rank Currency % Share of FX (June 2011) % Share of World GDP (2011) 1 USD EUR JPY GBP AUD CNY Sources: SWIFT, IMF, Hang Seng Bank 3

4 Reducing reliance on the US dollar The financial crisis of 2008 is also a factor behind the Mainland s decision to internationalise the RMB as it highlighted the risks of over-reliance on the US dollar as a global settlement and reserve currency. The financial crisis, which intensified in late 2008, led to deteriorating funding conditions, a decline in consumer and investor confidence, and a dramatic slump in world trade plunging advanced economies into a deep recession. Governments and central banks worldwide launched measures to stabilise their financial systems and stimulate economic activity. The US Federal Reserve, for instance, cut key interest rates to near zero in December 2008 and adopted quantitative easing in early 2009 in a bid to revive lending. The impact of these policy moves caused sharp fluctuations in financial markets and movements in the US dollar were also volatile. The dollar lost about 15% of its value against a basket of major currencies between March and December 2009, before rebounding some 20% in the ensuing seven months. The dollar s increasing volatility became a concern for Mainland exporters, many of whom rely on manufacturing trade business with wafer-thin profit margins. US Dollar Index Index Currency volatility also created uncertainty for the Mainland s monetary authorities as a large proportion of the country s USD3.3 trillion in foreign exchange reserves are believed to be denominated in US dollars. Currency Composition of Mainland China s Official Foreign Exchange Reserves (% share of total) US dollar Euro British pound Japanese yen Swiss franc Others Source: IMF Governor of the PBOC Zhou Xiaochuan wrote three articles in 2009 calling for the establishment of an international reserve currency that is not tied to any sovereign country and is able to maintain long-term stability in value. He suggested using Special Drawing Rights (SDRs) as an alternative to the US dollar. But given the many technical and other difficulties in shifting to a SDR-based reserve currency, the Mainland has instead decided to push for the increasing use of the RMB in global trade and other transactions. Milestones for RMB internationalisation The RMB s journey to the world began in Hong Kong. The city was chosen to run pilot programmes for offshore use of the Chinese currency. Banks in Hong Kong were first permitted to provide RMB deposit, exchange, remittance and credit card services to personal customers in Further relaxation occurred in 2007 when the authorities allowed Mainland financial institutions to issue RMB bonds in the city. However, progress was slow during those early years as Hong Kong residents had little incentive to shift their savings from Hong Kong dollars and other foreign currencies into RMB. Regulatory restrictions also limited the convertibility of the RMB in the offshore market. 4

5 The internationalisation of the RMB really began to take off in 2009 when the Mainland authorities permitted cross-border trade between Hong Kong and pilot Mainland cities to be settled in RMB. The practice was then extended to other countries trade with the Mainland. Data from the PBOC showed that China s total cross-border trade settled in RMB amounted to RMB2,935.2 billion in RMB Internationalisation Milestones RMB as a Global Trade Currency Jul-09 Launch of cross-border RMB trade settlement pilot scheme Jun-10 Cross-border RMB trade settlement scheme expanded to 20 provinces and cities on mainland China as well as covering the whole world outside mainland China Dec-10 List of eligible exporters on mainland China under cross-border RMB trade settlement scheme expanded Aug-11 Geographical coverage of cross-border RMB trade settlement scheme expanded to incude the whole of China Mar-12 Cross-border RMB trade settlement scheme expanded to include all enterprises on mainland China RMB as a Global Investment Currency Nov-03 PBOC agrees to provide RMB clearing arrangements in HK Jan-04 Personal RMB business commences in HK Jul-07 China Development Bank issues first RMB bond in HK Sep-09 Ministry of Finance of PRC issues first sovereign RMB-denominated bond in HK Jul-10 Launch of offshore RMB market in HK, with all corporates permitted to open RMB accounts Aug-10 Onshore RMB interbank bond market opened to eligible offshore RMB financial institutions Sep-10 First issue of RMB bond by a multinational corporation Jan-11 Mainland enterprises permitted to make outward direct investment in RMB Apr-11 Launch of first RMB listed securities in HK Oct-11 Formalisation of RMB foreign direct investment scheme Dec-11 Eligible mainland-based brokerages and asset management firms in Hong Kong permitted to invest in Mainland s bond and equity markets under RQFII channel Feb-12 Launch of world s first RMB-denominated gold ETF in HK Apr-12 RQFII quotas increased May-12 Mainland non-financial institutions permitted to issue RMB bonds in HK Aug-12 Personal RMB business in HK expanded to non-hk residents RMB as a Global Reserve Currency Dec-10 Several central banks add RMB to their foreign exchange reserves More measures to expand the scope of offshore RMB business were announced in The PBOC, the Hong Kong Monetary Authority (HKMA) and the Bank of China (Hong Kong) signed an amended clearing agreement for RMB on July 19, allowing for interbank transfers of RMB deposits in Hong Kong, as well as granting permission for companies in Hong Kong to exchange foreign currency for RMB without limit as long as the resulting open position are not squared with RMB Clearing Bank. One month later, the Mainland authorities announced the partial opening up of the Mainland s interbank bond market for foreign central banks, RMB clearing banks in Hong Kong and Macau, and other foreign banks participating in cross-border trade settlement in RMB. 5

6 Other schemes were later added, including RMB Outward Direct Investment (RODI), RMB Foreign Direct Investment (RFDI) and RMB Qualified Foreign Institutional Investor (RQFII). This latter scheme allows offshore financial institutions to invest their offshore RMB funds in the Mainland s onshore interbank bond and equity markets. All the schemes, which allow more outflows of RMB to offshore markets, as well as for offshore RMB to return to domestic capital markets, helped accelerate the internationalisation of the RMB. At the same time, the PBOC has also been establishing and expanding local currency bilateral swap lines with central banks around the world to facilitate and expand the use of the RMB in international trade and financial transactions. The amounts of these bilateral agreements are small (the largest is RMB400 billion with the HKMA in Hong Kong), but they indicate efforts to make other countries central banks comfortable and familiar with RMBdenominated instruments and facilities. Currency Swap Agreements between PBOC and Other Central Banks Amount Date (RMB bn) Indonesia Mar Argentina Mar Belarus Mar Iceland Jun Singapore Jul New Zealand Apr Uzbekistan Apr Kazakhstan Jun-11 7 Russia Jun-11 N.A. Korea Oct Hong Kong Nov Thailand Dec Pakistan Dec UAE Jan Malaysia Feb Turkey Feb Mongolia Mar Australia Mar Ukraine Jun Total 1,666.2 The RMB has also started to appear in a few central banks foreign exchange reserve portfolios. Malaysia and Nigeria first reported RMB reserves in Other central banks, including those in South Korea, the Philippines and Indonesia, have also expressed interest in including RMB-denominated instruments in their portfolios. Hong Kong as a dominant offshore RMB centre Deposits As RMB internationalisation started in Hong Kong, the city has emerged as a leading offshore RMB market. Despite strong competition from other emerging offshore RMB centres, Hong Kong is expected to maintain its dominant position due to its unique position, first-mover advantage and continued support from the Mainland authorities. The volume of RMB deposits accumulated in Hong Kong s banks began to surge in 2010 after the launch of the cross-border RMB settlement scheme. Although the pace of growth has slowed somewhat in the past year due mainly to diminished expectations of RMB appreciation as well as additional investment choices for offshore RMB deposit holders the deposit pool still amounted to RMB571 billion as at the end of November 2012, accounting for about 9% of total deposits in the Hong Kong banking system. The size of RMB deposit funds in Hong Kong amounts to about RMB670 billion if RMB CDs are included in the calculation. The total pool (deposits and CDs) is much larger than that in other RMB offshore centres. Singapore is said to have a RMB deposit pool of about RMB60 billion as at June London had about RMB35 billion in 2011, not including interbank RMB deposits, and Taiwan about RMB21.5 billion at the offshore banking units (OBU) of banks operating on the island at the end of November Source: PBOC 6

7 The pace of RMB deposit growth could accelerate again in the near term as the RMB has been regaining strength after the conclusion of the 18 th National Congress of the Communist Party of China and the announcement of the new politburo standing committee in mid-november In fact, the Chinese currency hit the 1% trading band limit permitted by the PBOC throughout November and December 2012, rising to a 19-year high versus the US dollar. Renminbi Deposits in Hong Kong RMB billion Renminbi Deposits in Hong Kong (Share of total deposits in Hong Kong) % share the Chinese currency has surged. According to PBOC statistics, China s total cross-border trade, including goods, services and other current account activities, settled in RMB amounted to RMB2,935.2 billion in 2012; and that in goods totaled RMB2,060 billion. The latter accounted for 8.4% of Mainland s total exports and imports of goods during the same period. Remittances of RMB used for cross-border trade settlement in Hong Kong rose to an average of RMB215 billion a month in the first 11 months of 2012, compared with monthly averages of RMB57 billion in the second half of 2010 and RMB160 billion in These statistics show that Hong Kong has a dominant position in the Mainland s cross-border trade settlement flows. Cross-border Trade Settlement in RMB in Hong Kong RMB billion / /2010 1/2011 4/2011 7/ /2011 1/2012 4/2012 7/ /2012 Sources: HKMA, Hang Seng Bank Total RMB Cross-border Trade Settlement (% share of total, as at Dec 2011) 21.4% Cross-border trade settlement 2.4% 2.4% 2.5% 63.7% The use of RMB in cross-border trade settlement 7.6% marked a turning point in the development of Hong Kong as an offshore RMB centre. Since it began in 2009, cross-border trade settlement in HK Macau Singapore Japan Taiwan Others Sources: PBOC, Hang Seng Bank 7

8 Dim sum bonds Hong Kong s RMB bond (commonly referred to as dim sum bonds ) market has experienced rapid growth since the end of 2010 after the Chinese government expanded the pool of dim sum bond issuers beyond Mainland financial institutions to include multinational corporations and international financial institutions in 2010 and Mainland corporations in There has also been continuing growth since the Mainland authorities announced rules that establish a permitted procedure for remitting the proceeds of an offshore bond issue to the Mainland. The total value of dim sum bond issuance rose to RMB175 billion, with 84 issuers, in RMB trading The rapid development of RMB markets is also reflected in increasing interbank trading activity in offshore RMB in Hong Kong. The average daily turnover in the spot offshore RMB market is estimated to be about USD2.7 billion in 2011, of which USD1.5 billion, or 56%, was carried out in Hong Kong. Average Daily Turnover in Spot RMB Offshore Market in 2011 (USD billion) New Dim Sum Bond Issuance By year CNY bn No. of issuers By issuer type Corporates 22% 43% Chinese FIs 46% 40% Supranationals 26% 13% Foreign FIs 3% 4% By tenor 100% 100% Yr 27% 2Yr 15% 3Yr 42% 5Yr 12% 7Yr 4% 100% Source: Bloomberg, Hang Seng Bank 0.7 HK London Others Sources: The City of London Corporation, Hang Seng Bank Development of other offshore RMB centres Apart from Hong Kong, other cities have begun to explore and/or develop offshore RMB business. These include international cities such as London and Singapore, as well as domestic cities on the Mainland, such as Shanghai, Tianjin and Qianhai in Shenzhen. Many of these cities have considerable potential to challenge Hong Kong s position as the dominant offshore RMB centre. For example, London is a leading international financial centre, commanding the largest share of foreign exchange trading in the world. The city also has a deep talent pool of financiers and a strong track record of innovation and risk management. Its time zone, sound legal system and comprehensive regulatory framework also work in its favour. Despite its late start, London is accumulating a growing amount of RMB deposits. By the end of 2011, more than RMB109 billion was deposited with banks in London, including RMB35 billion from personal customers and RMB74 billion from the interbank market. 8

9 Singapore and Taiwan are also vying for a share of offshore RMB business. While Singapore is still awaiting Beijing s decision on appointing a clearing bank for RMB in the city-state, Taiwan seems to have moved one step ahead. Bank of China s Taipei branch was appointed as a clearing bank for RMB business in Taiwan in December 2012, making it an official offshore RMB centre after Hong Kong. This development is important as it will facilitate the opening of bank accounts and interbank trading in RMB in Taiwan. According to SWIFT, Taiwan currently only processes less than 1% of global offshore RMB payments, much less than runaway leader Hong Kong with a market share of around 70%, or even London and Singapore (each with about 3%). However, volume in Taiwan looks likely to expand given the extent of bilateral trade between the island and the Mainland. Taiwan s trade with the Mainland has grown substantially over the past two decades. Taiwanese investment also accounts for a substantial share of foreign direct investment on the Mainland. The Mainland s experimentation with RMB internationalisation is not restricted to offshore centres. Its domestic cities could also play an increasingly important role. Qianhai, a coastal strip in Shenzhen, will serve as a pilot zone for the loosening of restrictions on RMB flows between Hong Kong and the Mainland, and a liberalisation of trade in services. The PBOC announced in late December 2012 that companies registered in Qianhai would be allowed to borrow RMB from banks in Hong Kong for use locally. With the detailed rules on application procedures and loan limits recently set out, the start of cross-border RMB lending will have far-reaching implications for the Mainland s financial liberalisation and Hong Kong s development as an offshore RMB centre. For a start, the interest rates and tenor of the cross-border RMB loans will be decided by banks and borrowers. This represents a further move towards the liberalisation of interest rates as banks on the Mainland currently have to set loan rates based on the PBOC s benchmark. Cross-border RMB lending represents a further step in the opening up of the Mainland s capital account. Banks in Hong Kong will have greater use for the RMB deposit pool, giving them more incentive to offer better interest rates to attract RMB deposits. Such a development would not only lead to faster growth in RMB loans and deposits in Hong Kong, but also narrow the interest rate gaps for RMB funds between the Mainland and Hong Kong. Economic reforms on the Mainland The benefits of RMB internationalisation are plenty, with one of the most immediate being the reduction in transaction costs for Mainland companies engaging in global trade and investment. Currency risks for Mainland international investment positions will also be lower. In the longer term, the growing use of the RMB in global trade and investment will also enable the Mainland to reap seigniorage tax income, a benefit currently enjoyed by the US government with the US dollar being the dominant global currency. More importantly, however, RMB internationalisation will help reduce the Mainland s vulnerability to fluctuations in the US dollar and US economic policy changes, and will increase China s influence in reshaping the global financial system. Other far-reaching benefits of RMB internationalisation may include acting as a spur to accelerate financial and exchange rate reforms on the Mainland, as such reforms are critical if the RMB is to become a truly international currency. 9

10 Interest rate reforms In most developed economies, central banks only set a target rate for overnight interbank rates for example, the fed funds target rate of the US Federal Reserve and the main refinancing rate of the European Central Bank to guide the direction of commercial interest rates. On the Mainland, however, the PBOC determines the whole range of policy interest rates, including the benchmark lending and deposit rates of all commercial banks, which are then subject to the approval of the State Council. Such a system has disadvantages. For depositors, for instance, artificially low bank deposit interest rates may impose negative investment returns on their savings. Due to the lack of other investment options, this has caused some depositors to shift funds from bank savings into the real estate and stock markets, often resulting in asset bubbles and intensifying domestic inflation pressures. The standardised policy interest rates for all commercial banks has created a banking environment with low competition, leading to inefficient and oversized operations. The banks have reduced motivation to improve their management of financial risk or their operational competitiveness. The situation is changing slowly. Commercial banks on the Mainland have been given more flexibility (within a stipulated range) to decide the interest rates they want to offer to consumers, meaning banks can now offer higher interest rates to savers (up to 110% of the benchmark deposit rate) and lower rates to borrowers (no less than 70% of the benchmark lending rate). Restrictions are likely to be further relaxed as the Mainland s financial institutions become more competitive and are increasingly able to operate in accordance with commercial principles. Other financial industries, including the equity, bond and insurance markets, are also likely to grow. Exchange rate reform and capital account convertibility Apart from giving banks more flexibility in setting interest rates, the Mainland authorities have also taken steps to reform the RMB exchange rate. In fact, the process has been underway for the past three decades, first allowing the RMB to depreciate, and later to appreciate, against the dollar. The RMB exchange rate has appreciated over 30% against the US currency since At the same time, the RMB exchange rate has been permitted to move within a wider range: from a daily band of 0.3% against the US dollar in 2005, to 0.5% in 2007, and then 1% in April USD/CNY Spot Exchange Rates In contrast to the situation in recent years, the RMB exchange rate is no longer a one-way bet for investors and has been exhibiting stronger two-way fluctuations. This trend is likely to persist as the Mainland economy gradually reduces its reliance on exports for growth, and its current account surplus is likely to stabilise at around 3% of GDP. Hang Seng s forecast calls for a RMB exchange rate of around 6.20 against the US dollar by the end of In addition, the Mainland authorities may permit greater fluctuations in the RMB exchange rate by widening the daily trading band for the USD/ RMB rate from its current level of 1%. The liberalisation of the capital account is a critical condition for further RMB internationalisation. The process has already begun, and looks set to gain momentum, enabling more investment funds to flow in and out of the Mainland. Although there are still capital controls in place, they are being gradually, selectively and cautiously dismantled. Inflows and outflows have been increasing with the expansion of schemes like Qualified Domestic Institutional Investor (QDII), Qualified Foreign Institutional Investor (QFII) and RQFII. 10

11 Outlook for 2013 The ultimate aim is for the RMB to become a fully convertible currency, to be used in global trade settlement, investment and reserve management. But to achieve such a goal, the domestic sector will have to undergo further structural changes, including interest and exchange rate liberalisation, financial market reforms and, ultimately, capital account convertibility. In the years ahead, more policies are likely to be launched to accelerate the process of RMB internationalisation. These may include measures to allow more two-way cross-border flows and twoway fluctuations of the RMB against other major currencies, as well as identifying more offshore and onshore cities for pilot RMB trading activities. The private sector will respond by launching more hedging, investment, loan and insurance products denominated in the Chinese currency. The RMB looks set to gain importance in the global economy and Hong Kong stands to benefit as an offshore RMB centre. The following is a summary of Hang Seng predictions: The RMB exchange rate is expected to maintain a slightly firmer position against the US dollar, with expectations of a rebound in the Mainland s exports and the resulting trade surplus. The PBOC s USD/RMB mid-rate is likely to be near 6.20 by the end of 2013, representing an appreciation of 1.4% for the RMB compared with the end of The Mainland authorities are likely to tolerate greater fluctuations in the RMB exchange rate by widening the daily trading band for the USD/RMB rate to 1.5%-2% from its current level of 1%. With Mainland growth stabilising and sentiment in the housing market expected to improve, there is less pressure on the PBOC to further ease monetary policy. The benchmark lending rates are expected to remain unchanged during the year, with the one-year lending rate held at 6%. Hong Kong s offshore RMB deposit pool, excluding CDs, could grow at a faster pace, reflecting an expected rebound in cross-border trade settlement flows and potentially higher deposit interest rates as banks compete for RMB deposits. RMB deposits could account for over 25% of total deposits in Hong Kong by 2015, from less than 10% at the end of This will make RMB deposits the second-largest source of deposits in Hong Kong, replacing the position long held by US dollar deposits. With the RMB gaining increasing acceptance globally, more companies will choose to settle their cross-border trade in RMB. The amount of cross-border trade settlement in RMB could grow by about 20% in 2013, faster than Hong Kong s total trade flows with the Mainland. 11

12 Disclaimer This document has been issued by Hang Seng Bank Limited ( HASE ) and the information herein is based on sources believed to be reliable and the opinions contained herein are for reference only and may not necessarily represent the view of HASE. The research analyst(s) who prepared this report certifies(y) that the views expressed herein accurately reflect the research analyst s(s) personal views about the financial instrument or investments and that no part of his/her/their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report. Nothing herein shall constitute as offers or solicitation of offers to buy or sell foreign exchange contracts, securities, financial instruments or other investments. Re-distribution of any part of this document by any means is strictly prohibited. The information contained in this document may be indicative only and has not been independently verified and no guarantee, representation, warranty or undertaking, express or implied is made as to the fairness, accuracy, completeness or correctness of any information, projections or opinions contained in this document or the basis upon which any such projections or opinions have been based and no responsibility or liability is accepted in relation to the use of or reliance on any information, projections or opinions whatsoever contained in this document. Investors must make their own assessment of the relevance, accuracy and adequacy of the information and opinions contained in this document and make such independent investigations as they may consider necessary or appropriate for the purpose of such assessment. All such information, projections and opinions are subject to change without notice. HASE and its affiliates may trade for their own account in, may have underwritten, or may have a position in, all or any of the securities or investments mentioned in this document. Brokerage or fees may be earned by HASE or its affiliates in respect of any business transacted by them in all or any of the securities or investments referred to in this document. The investments mentioned in this document may not be suitable for all investors. Investors must make investment decisions based on their own investment objectives, financial position and particular needs and consult their own professional advisers where necessary. This document is not intended to provide professional advice and should not be relied upon in that regard. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. Investment involves risk. Investors should note that value of investments can go down as well as up and past performance is not necessarily indicative of future performance. This document does not purport to identify all the risks that may be involved in the securities or investments referred to in this document. 12

Monetary Policy and Interest Rate Reform

Monetary Policy and Interest Rate Reform Thomas Shik Senior Economist thomasshik@hangseng.com Monetary Policy and Interest Rate Reform The benchmark lending rate set by the People s Bank of China (PBOC) has remained the key reference for banks

More information

China GDP grows 6.8% in Q4 2016

China GDP grows 6.8% in Q4 2016 Thomas Shik Acting Chief Economist thomasshik@hangseng.com The 2017 Outlook The mainland China economy expanded by an annual rate of 6.8% in the fourth quarter of 2016, up from 6.7% in the third quarter,

More information

China Economic Growth Slows in 1Q

China Economic Growth Slows in 1Q Yao Shaohua, PhD Senior Economist shaohuayao@hangseng.com China Economic Growth Slows in 1Q 15 April 2015 Mainland China s economic growth continued to lose momentum in the first quarter, due largely to

More information

RMB internationalization:

RMB internationalization: RMB internationalization: Recent Development and headwinds Alicia Garcia-Herrero Chief Economist for Emerging Markets, BBVA Key points 1 Why is China pushing to internationalize the RMB? 2 Recent development

More information

Inflation Outlook and Monetary Easing

Inflation Outlook and Monetary Easing Thomas Shik Acting Chief Economist thomasshik@hangseng.com Inflation Outlook and Monetary Easing Although annual consumer price inflation rose for a second consecutive month in July, the underlying trend

More information

Emergence of RMB as an International Currency

Emergence of RMB as an International Currency Emergence of RMB as an International Currency Cindy Lo, Partner Allen & Overy, Beijing Office March 2013 1 Agenda An Overview: the Chinese Government s policy objectives and key regulatory developments

More information

The Hong Kong Economy in Contraction Mode

The Hong Kong Economy in Contraction Mode Irina Fan Senior Economist irinafan@hangseng.com Joanne Yim Chief Economist joanneyim@hangseng.com 22 December 08 The Hong Kong Economy in Contraction Mode Hong Kong is in recession and leading economic

More information

Offshore RMB Market Update

Offshore RMB Market Update Offshore RMB Market Update Ricky Li Economics and Strategic Planning Department Bank of China (Hong Kong) Limited November 2014 Offshore RMB Market Update A. Offshore RMB Bond Market Update B. RMB Internationalization

More information

RMB Internationalization Status and Its Implications

RMB Internationalization Status and Its Implications International Finance RMB Internationalization Status and Its Implications Hansoo Kim, Research Fellow* 1) China announced the RMB internationalization policy in 2009 and has carried forward many initiatives

More information

The Development of the Offshore. Bonds. Peter J. Morgan, PhD Senior Consultant for Research Asian Development Bank Institute

The Development of the Offshore. Bonds. Peter J. Morgan, PhD Senior Consultant for Research Asian Development Bank Institute The Development of the Offshore Market of the Yuan-Denominated Bonds Peter J. Morgan, PhD Senior Consultant for Research Asian Development Bank Institute ADBI-OECD Roundtable on Capital Market Reform in

More information

Hong Kong Economy: Recovering from Recession?

Hong Kong Economy: Recovering from Recession? Irina Fan Senior Economist irinafan@hangseng.com Joanne Yim Chief Economist joanneyim@hangseng.com September 29 Hong Kong Economy: Recovering from Recession? Hong Kong staged a strong rebound in the second

More information

2017 Renminbi Internationalisation Survey Report. Together we thrive

2017 Renminbi Internationalisation Survey Report. Together we thrive 2017 Renminbi Internationalisation Survey Report Together we thrive 2 2017 Renminbi Internationalisation Survey Report HSBC is at the forefront of both offshore and onshore Renminbi (RMB) business: One

More information

Unravel the complexities of RMB Internationalisation The Rising Role of RMB- A Corporate Perspective 24 May 2012 PUBLIC

Unravel the complexities of RMB Internationalisation The Rising Role of RMB- A Corporate Perspective 24 May 2012 PUBLIC Unravel the complexities of RMB Internationalisation The Rising Role of RMB- A Corporate Perspective 24 May 2012 1. RMB Internationalisation Overview A Global Trade Currency A Global Investment Currency

More information

Second wind for offshore RMB market

Second wind for offshore RMB market Citi OpenInvestor September 2012 7 Globalization Citi OpenInvestor presents: Second wind for offshore RMB market In just one year, the internationalization of the renminbi has seen a thriving market in

More information

Upside Risk to Inflation and Downside Risk to Growth

Upside Risk to Inflation and Downside Risk to Growth Irina Fan Senior Economist irinafan@hangseng.com Joanne Yim Chief Economist joanneyim@hangseng.com July 28 Upside Risk to Inflation and Downside Risk to Growth The economic landscape has changed significantly

More information

The Internationalisation of the Renminbi

The Internationalisation of the Renminbi Tel: (852)3550-7070; Fax: (852)2104-6938 Email: lawrence@lawrencejlau.hk; WebPages: www.igef.cuhk.edu.hk/ljl *All opinions expressed herein are the author s own and do not necessarily reflect the views

More information

Hong Kong Economic Update

Hong Kong Economic Update Irina Fan Senior Economist irinafan@hangseng.com Joanne Yim Chief Economist joanneyim@hangseng.com May 28 Hong Kong Economic Update Hong Kong s March export growth stayed low at 7.6 yoy, as exports to

More information

Hong Kong: Will service exports shine again?

Hong Kong: Will service exports shine again? Jackit Wong Senior Economist jackitwswong@hangseng.com Thomas Shik Acting Chief Economist thomasshik@hangseng.com Hong Kong: Will service exports shine again? Since the end of the global financial crisis,

More information

CESC Index Report for September

CESC Index Report for September CESC Index Report for September China Exchanges Services Co Ltd (CESC) Highlights CES SCHK100, which represents large cap stocks eligible for Southbound trading under Stock Connect, rose 1.4 per cent and

More information

International Monetary System Reform and Asian Monetary and Financial Cooperation

International Monetary System Reform and Asian Monetary and Financial Cooperation International Monetary System Reform and Asian Monetary and Financial Cooperation Dr. Zong Liang Deputy General Manager Strategic Development Department Bank of China New Delhi, March 20, 2012 0 Contents

More information

Asia Bond Monitor November 2018

Asia Bond Monitor November 2018 January 9 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets L ast week, the Philippines raised USD. billion from the sale of -year global bonds priced at basis points above benchmark

More information

Increasing Competition among Markets for Offshore Renminbi Business

Increasing Competition among Markets for Offshore Renminbi Business Increasing Competition among Markets for Offshore Renminbi Business Eiichi Sekine Chief Representative, Beijing Representative Office Nomura Institute of Capital Markets Research Masanobu Iwatani Financial

More information

RMB Internationalization Policies & Trade Finance Services. Xi Jingjing April 2017

RMB Internationalization Policies & Trade Finance Services. Xi Jingjing April 2017 RMB Internationalization Policies & Trade Finance Services Xi Jingjing April 2017 Contents China-Hungary Relationship Status quo and Future of RMB Internationalization BOC s Financial Services 2 China-Hungary

More information

CHINA FOCUS II AIMING FOR THE SDR BASKET

CHINA FOCUS II AIMING FOR THE SDR BASKET AIMING FOR THE SDR BASKET With its rising economic size and position as a top trading nation, China is aiming for the RMB to be included into the SDR basket of currencies at the 2015 IMF review, which

More information

Paul Browne, Partner, London Yongmei Cai, Partner, Beijing Jay Lee, Partner, Hong Kong

Paul Browne, Partner, London Yongmei Cai, Partner, Beijing Jay Lee, Partner, Hong Kong One Belt One Road and RMB internationalisation: a look at how recent PRC regulatory developments provide significant opportunities for market participants in the Financial Markets in the UK and Europe

More information

RENMINBI INTERNATIONALISATION: THE NEXT STEP AND BEYOND

RENMINBI INTERNATIONALISATION: THE NEXT STEP AND BEYOND RENMINBI INTERNATIONALISATION: THE NEXT STEP AND BEYOND Presentation to the Budapest Renminbi Initiative Conference CHI LO, SENIOR ECONOMIST Budapest 5 April 2017 1 RENMINBI INTERNATIONALISATION 2 First

More information

Development of RMB Internationalization

Development of RMB Internationalization Development of RMB Internationalization RMB has become world s #6 payment currency, #3 trade finance currency (SWIFT), #8 FX currency (BIS) and the latest SDR basket currency. Trade Currency Investment

More information

Global FX 2 Apr 2012

Global FX 2 Apr 2012 Global FX 2 Apr 2012 Uncertainty reigned in the currency market over the past two weeks, with the dollar fluctuating in rather tight ranges against most other major currencies. The greenback initially

More information

Recent Asia experiences with capital flows

Recent Asia experiences with capital flows Recent Asia experiences with capital flows Rob Subbaraman, Chief Economist Asia Ex-Japan December 2007 Asia ex-japan's total balance of payments % of GDP 10 8 6 4 2 0-2 -4 1996 1997 1998 1999 2000 2001

More information

2013 The year of the renminbi

2013 The year of the renminbi 2013 The year of the renminbi Economic and regulatory conditions affecting the renminbi are unfolding quickly. This document reflects HSBC s views on how the development of the renminbi will unfold as

More information

Hong Kong First Quarter GDP Preview Nearing Full Capacity and a Wary Inflation Outlook

Hong Kong First Quarter GDP Preview Nearing Full Capacity and a Wary Inflation Outlook Irina Fan Senior Economist irinafan@hangseng.com Joanne Yim Chief Economist joanneyim@hangseng.com May 11 Hong Kong First Quarter GDP Preview Nearing Full Capacity and a Wary Inflation Outlook The Hong

More information

CESC Annual Index Report 2016

CESC Annual Index Report 2016 CESC Annual Index Report 2016 China Exchanges Services Co., Ltd. (CESC) Highlights Hong Kong stocks outperformed Mainland A shares in 2016. CES A80 and CES SCHK100 were down 6.1 per cent and 1 per cent

More information

Internationalization of the RMB: Developments, Problems and Policies

Internationalization of the RMB: Developments, Problems and Policies Internationalization of the RMB: Developments, Problems and Policies 23 October 2015 Zheng Liansheng Outline Introduction The development of RMB internationalization RMB Offshore markets The problems behind

More information

ASF Hong Kong Market Report

ASF Hong Kong Market Report HONG KONG ECONOMY ASF 2016 - Hong Kong Market Report Background As everyone knows, Hong Kong has a very good geographic location, it is surround by sea and backup by a huge China market. HK has taken a

More information

Asia Bond Monitor November 2018

Asia Bond Monitor November 2018 7 December 8 Key Developments in Asian Local Currency Markets T he monetary board of the Bangko Sentral ng Pilipinas decided to keep its key policy rates steady during its final meeting for the year on

More information

China Financial Reforms: In need of further deregulation

China Financial Reforms: In need of further deregulation China Financial Reforms: In need of further deregulation Mingchun Sun 1 Summary Over the past decade, the Chinese government has implemented a series of financial reforms and transformed its financial

More information

Understanding RQFII The Great Door Opener for China Access

Understanding RQFII The Great Door Opener for China Access Markets and Securities Services Investor Services Understanding RQFII The Great Door Opener for China Access By: Stewart Aldcroft, Citi Investor Services Since China first started opening up its capital

More information

ONE YEAR ON: MAJOR MILESTONES ACHIEVED AND OPPORTUNITIES AHEAD

ONE YEAR ON: MAJOR MILESTONES ACHIEVED AND OPPORTUNITIES AHEAD CNH ket Monitor 1 JULY ONE YEAR ON: MAJOR MILESTONES ACHIEVED AND OPPORTUNITIES AHEAD This week Hong Kong celebrates the first anniversary of the offshore RMB business centre. The milestones achieved include:

More information

The Renminbi: Now in the Basket of Special Drawing Rights (SDR)

The Renminbi: Now in the Basket of Special Drawing Rights (SDR) The Renminbi: Now in the Basket of Special Drawing Rights (SDR) Lawrence J. Lau 刘遵义 Ralph and Claire Landau Professor of Economics, The Chinese University of Hong Kong and Kwoh-Ting Li Professor in Economic

More information

AsianBondsOnline WEEKLY DEBT HIGHLIGHTS

AsianBondsOnline WEEKLY DEBT HIGHLIGHTS AsianBondsOnline WEEKLY 9 January 7 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets Consumer price inflation in Indonesia eased to.% year-on-year (y-o-y) in December from.6% y-o-y

More information

Accessing onshore China

Accessing onshore China Accessing onshore China Alan Yau Director, Institutional Client Management only intended for professional investors as defined by MiFID Old Chinese proverb: When out of doors, never show your silver Investing

More information

China: Beyond the headlines. Bill Maldonado HSBC Global Asset Management

China: Beyond the headlines. Bill Maldonado HSBC Global Asset Management China: Beyond the headlines Bill Maldonado HSBC Global Asset Management Are you a China Bull or a Bear? Source: Various news publications 2 Bear myth #1: Hard landing? GDP: Growth is slowing, but it s

More information

Economic Watch. As RMB internationalization advances, new headwinds call for policy steps. China

Economic Watch. As RMB internationalization advances, new headwinds call for policy steps. China China Hong Kong, July 17, 212 Economic Analysis Asia Chief Economist of Emerging Markets Alicia Garcia Herrero alicia.garcia-herrero@bbva.com.hk Chief Economist for Asia Stephen Schwartz Stephen.schwartz@bbva.com.hk

More information

Global FX 3 Jan 2012

Global FX 3 Jan 2012 Global FX Jan The euro area s sovereign debt crisis has been dominating trading in financial markets over the past year and the currency market was no exception. The region s debt problems spread from

More information

Offshore CNH Market

Offshore CNH Market Offshore CNH Market 2015.09.17 RMB Internationalization Gathers Pace China continues to accelerate regulatory reforms towards RMB internationalization The global major currency club is refining itself

More information

Asia Bond Monitor March 2015

Asia Bond Monitor March 2015 June 1 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets Consumer price inflation in Malaysia accelerated to.1% year-on-year (y-o-y) in May from 1.8% y-o-y in April, mainly due

More information

Investment Opportunities: RMB Bonds

Investment Opportunities: RMB Bonds Titre de la presentation Europlace Shanghai 2010 Investment Opportunities: RMB Bonds Asian Local Currency Markets in Context Note: Local currency does not include government issuance Source: Dealogic,

More information

The USD/CNY Adjustment Is It Complete?

The USD/CNY Adjustment Is It Complete? The USD/CNY Adjustment Is It Complete? Derek Halpenny European Head of Global Currency Research European Central Bank June 29 1 Substantial REER Appreciation 1 USD/CNY vs Renminbi REER 9 8 7 6 5 12 11

More information

2015 Government Work Report Preview

2015 Government Work Report Preview Thomas Shik Senior Economist thomasshik@hangseng.com 2015 Government Work Report Preview Mainland China s Premier Li Keqiang will deliver his annual government work report to the National People s Congress

More information

B-GUIDE: Economic Outlook

B-GUIDE: Economic Outlook Aug-12 Apr-13 Dec-13 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Quarterly Economic Outlook: Quarter 4 2017 4 January 2018 B-GUIDE: Economic Outlook The economy

More information

China s RMB: winning the SDR battle SDR inclusion is a milestone for China s capital account convertibility and RMB globalisation

China s RMB: winning the SDR battle SDR inclusion is a milestone for China s capital account convertibility and RMB globalisation 4 June 2015 by Aidan Yao Research & Investment Strategy China s RMB: winning the SDR battle SDR inclusion is a milestone for China s capital account convertibility and RMB globalisation Key points IMF

More information

The Chinese Economy and the Renminbi

The Chinese Economy and the Renminbi The Chinese Economy and the Renminbi Lawrence J. Lau Ralph and Claire Landau Professor of Economics, The Chinese University of Hong Kong and Kwoh-Ting Li Professor in Economic Development, Emeritus, Stanford

More information

China Focus RMB Internationalization In Progress

China Focus RMB Internationalization In Progress Quarterly Global Outlook 2Q211 RMB Internationalization In Progress 23 The RMB is internationalizing progressively as China opens up more avenues for the controlled outflow of its currency. The main factors

More information

Gary Smith Global Head of Official Institutions BNP Paribas Investment Partners - December 2011 FOR PROFESSIONAL INVESTORS

Gary Smith Global Head of Official Institutions BNP Paribas Investment Partners - December 2011 FOR PROFESSIONAL INVESTORS Global Head of Official Institutions BNP Paribas Investment Partners - December 2011 FOR PROFESSIONAL INVESTORS Reserve Management Puzzle Global Financial crisis creating an increased aversion to risk.

More information

Chi on China. RMB Internationalisation (part 1 of 2): Short-term Tactics May have Changed SUMMARY. For professional investors 24 February

Chi on China. RMB Internationalisation (part 1 of 2): Short-term Tactics May have Changed SUMMARY. For professional investors 24 February For professional investors 24 February 2016 1 Chi on China RMB Internationalisation (part 1 of 2): Short-term Tactics May have Changed Change will not come if we wait for some other person or some other

More information

Offshore Renminbi (CNH) Market: Opportunities Continue to Expand Silicon Valley Bank. January 13, 2012

Offshore Renminbi (CNH) Market: Opportunities Continue to Expand Silicon Valley Bank. January 13, 2012 Offshore Renminbi (CNH) Market: Opportunities Continue to Expand Silicon Valley Bank January 13, 2012 1 Panelists Ed Sauve, Senior Advisor GFS, Silicon Valley Bank Mark Noble, Senior Foreign Exchange Trader,

More information

Chi on China. RMB Internationalisation (part 1 of 2): Short-term Tactics May Have Changed SUMMARY. For professional investors 23 February

Chi on China. RMB Internationalisation (part 1 of 2): Short-term Tactics May Have Changed SUMMARY. For professional investors 23 February For professional investors 23 February 2016 1 Chi on China RMB Internationalisation (part 1 of 2): Short-term Tactics May Have Changed Change will not come if we wait for some other person or some other

More information

Flash Notes. China: Aiming for the SDR Basket

Flash Notes. China: Aiming for the SDR Basket UOB Global Economics and Markets Research Company Reg No. 193500026Z Suan Teck Kin Thursday, 30 April 2015 Suan.TeckKin@UOBgroup.com Flash Notes China: Aiming for the SDR Basket With its rising economic

More information

The Chinese Approach to Capital Account Liberalization: What Do We Learn from Renminbi Banking in Hong Kong?

The Chinese Approach to Capital Account Liberalization: What Do We Learn from Renminbi Banking in Hong Kong? HKIMR First International Conference on the Chinese Economy The Chinese Approach to Capital Account Liberalization: What Do We Learn from Renminbi Banking in Hong Kong? Dong HE Hong Kong Monetary Authority

More information

All the BRICs dampening world trade in 2015

All the BRICs dampening world trade in 2015 Aug Weekly Economic Briefing Emerging Markets All the BRICs dampening world trade in World trade in has been hit by an unexpectedly sharp drag from the very largest emerging economies. The weakness in

More information

Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul

Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul For professional investors 22 October 2014 1 Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul SUMMARY After Beijing assigned two offshore renminbi (RMB) clearing banks in London

More information

The Internationalisation of the Renminbi

The Internationalisation of the Renminbi Tel: (852)3550-7070; Fax: (852)2104-6938 Email: lawrence@lawrencejlau.hk; WebPages: www.igef.cuhk.edu.hk/ljl *All opinions expressed herein are the author s own and do not necessarily reflect the views

More information

A Challenging Start To The Year

A Challenging Start To The Year Ryan Lam, CFA Senior Economist ryancwlam@hangseng.com A Challenging Start To The Year Hong Kong s real GDP rose 2.1% in the first quarter of 2015, down from 2.4% in the fourth quarter of last year and

More information

The Internationalization of the RMB: A Treasury Perspective

The Internationalization of the RMB: A Treasury Perspective ctc guide to The Internationalization of the RMB: A Treasury Perspective Executive Summary Underwritten by: CTC GUIDE: The Internationalization of the RMB: A Treasury Perspective Executive Summary The

More information

China and Hong Kong Forex Market Developments One-way appreciation carrying into the new year

China and Hong Kong Forex Market Developments One-way appreciation carrying into the new year China and Hong Kong Forex Market Developments One-way appreciation carrying into the new year January 218 Monthly publication Alicia Garcia Herrero Chief Economist Asia Pacific +852 39-868 alicia.garciaherrero@natixis.com

More information

HKGCC proposals on Belt-and-Road Opportunities for Hong Kong s Financial Services Sector

HKGCC proposals on Belt-and-Road Opportunities for Hong Kong s Financial Services Sector HKGCC proposals on Belt-and-Road Opportunities for Hong Kong s Financial Services Sector Background 1. The Mainland s Belt-and-Road Initiative seeks to promote regional economic growth through economic

More information

Addressing Three Questions About The Hong Kong Economy

Addressing Three Questions About The Hong Kong Economy Ryan Lam, CFA Senior Economist ryancwlam@hangseng.com Addressing Three Questions About The Hong Kong Economy In this note, we address what we believe are some of the most important questions in assessing

More information

2015 Outlook: China s Economy and Bond Markets

2015 Outlook: China s Economy and Bond Markets Special Comment 215 Outlook: China s Economy and Bond Markets January 215 Elle Hu +852-2868 317 elle_hu@ccxap.com Carter Liu +852-2868 377 carter_liu@ccxap.com Jolie Li +852-2868 319 jolie_li@ccxap.com

More information

Chi on China RMB Undervaluation, Déjà vu

Chi on China RMB Undervaluation, Déjà vu For professional investors 26 February 2014 1 Chi on China RMB Undervaluation, Déjà vu SUMMARY The fall in China s current account surplus in recent years has not resulted from a genuine change in the

More information

Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul

Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul For professional investors 22 October 2014 1 Chi on China Renminbi Gran Turismo (Part 3 of 3): The Rising Yuan in Seoul SUMMARY After Beijing assigned two offshore renminbi (RMB) clearing banks in London

More information

Asia Bond Monitor November 2015

Asia Bond Monitor November 2015 1 February 16 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets Bangko Sentral ng Pilipinas (BSP) decided on 11 February to keep unchanged the overnight borrowing rate at.% and

More information

UNITED STATES U.S. jobless claims fall 5,000 to 348,000. Applications for benefits at lowest level since February 2008.

UNITED STATES U.S. jobless claims fall 5,000 to 348,000. Applications for benefits at lowest level since February 2008. 26 Mar 2012 UNITED STATES U.S. jobless claims fall 5,000 to 348,000. Applications for benefits at lowest level since February 2008. U.S. home sales fell in February, but upward revisions to January's pace

More information

Letter from Hong Kong

Letter from Hong Kong Letter from Hong Kong April 2015 The Hong Kong Capital Markets Welcome to our new publication. Our intention is to send out a high scope commentary, twice a year, focussing on a particular feature of the

More information

Monthly Outlook. June Summary

Monthly Outlook. June Summary Monthly Outlook June 2015 Summary Yields of US Treasuries (USTs) rallied in May, with the 2-year and 10-year yields up 4 and 9 basis points (bps) respectively as compared to end-april levels. During the

More information

The PBoC s progress report on renminbi internationalization

The PBoC s progress report on renminbi internationalization Mizuho Securities Asia Ltd Economics Research 17 Jun 2015 The PBoC s progress report on renminbi internationalization Jianguang Shen jianguang.shen@hk.mizuho-sc.com +852 2685 2022 Michael Luk michael.luk@hk.mizuho-sc.com

More information

Outlook and Strategy Hong Kong China Funds

Outlook and Strategy Hong Kong China Funds Q 208 Outlook and Strategy Hong Kong China Funds Investment Theme Mainland Stock Market Stabilises after Policy Impact Absorbed Mainland China s property sector rebounded as home prices stabilised. The

More information

Strategy Slowing EM outflows to support euro, Scandi markets

Strategy Slowing EM outflows to support euro, Scandi markets Jan-5 Jun-5 Nov-5 Apr-6 Sep-6 Feb-7 Jul-7 Dec-7 May-8 Oct-8 Mar-9 Aug-9 Jan-1 Jun-1 Nov-1 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Investment Research General Market

More information

Facilitating Malaysia-China Bilateral Trade. Malaysian Palm Oil Council Seminar Adnan Zaylani Bank Negara Malaysia 7 th Sept 2015

Facilitating Malaysia-China Bilateral Trade. Malaysian Palm Oil Council Seminar Adnan Zaylani Bank Negara Malaysia 7 th Sept 2015 Facilitating Malaysia-China Bilateral Trade Malaysian Palm Oil Council Seminar Adnan Zaylani Bank Negara Malaysia 7 th Sept 2015 1 1 Malaysia s trade with China is significant Malaysia ranks first among

More information

SMSF Investment Seminar Sydney. 18 Oct 2010

SMSF Investment Seminar Sydney. 18 Oct 2010 SMSF Investment Seminar Sydney 18 Oct 2010 Important Notice This document has been prepared by Asian Masters Fund Limited (Asian Masters Fund). The material that follows is a presentation of general background

More information

China may allow commercial banks to enter Futures Trading Market. Hong Kong plays a key role in facilitating One Belt One Road initiative

China may allow commercial banks to enter Futures Trading Market. Hong Kong plays a key role in facilitating One Belt One Road initiative RMB Focus JUNE 2016 I. China further details CIBM access for offshore investors Cross-border RMB Bond Scheme is launched in Shanghai FTZ Pilot Offshore Financing Scheme expands nationwide II. More investment

More information

China Economic Quarterly

China Economic Quarterly August 2016 Major economic indicators p1 /Policy updates p5 /Hot topic analysis p6 China Economic Quarterly www.pwccn.com/ceq Content I. Major economic indicators 1 II. Policy updates 5 III. Hot topic

More information

THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED 2012 CONSOLIDATED RESULTS HIGHLIGHTS. Pre-tax profit up 19% to HK$108,729m (HK$91,370m in 2011).

THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED 2012 CONSOLIDATED RESULTS HIGHLIGHTS. Pre-tax profit up 19% to HK$108,729m (HK$91,370m in 2011). News Release 4 March 2013 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED CONSOLIDATED RESULTS HIGHLIGHTS Pre-tax profit up 19% to HK$108,729m (HK$91,370m in ). tributable profit up 23% to HK$83,008m

More information

CESC Index Report for November

CESC Index Report for November CESC Index Report for November China Exchanges Services Co Ltd (CESC) Highlights Mainland A shares outperformed Hong Kong stocks in November. The CES A80 surged 7.4 per cent. The CES 300 surged 3.7 per

More information

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES. Bank of Russia.

RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES. Bank of Russia. RUSSIAN ECONOMIC OUTLOOK AND MONETARY POLICY CHALLENGES Bank of Russia July 218 < -1% -1-9% -9-8% -8-7% -7-6% -6-5% -5-4% -4-3% -3-2% -2-1% -1 % 1% 1 2% 2 3% 3 4% 4 5% 5 6% 6 7% 7 8% 8 9% 9 1% 1 11% 11

More information

Power. Schroder Asian Income. your way to higher yields. p.a.

Power. Schroder Asian Income. your way to higher yields. p.a. Schroder Asian Income POTENTIAL PAYOUTS 6% PAID MONT HLY* p.a. Power your way to higher yields * It is Schroder Investment Management (Singapore) Ltd s (the Manager s ) current intention to declare distributions

More information

Fed described the economy as "slow" and said employers remained reluctant to create jobs and Inflation "somewhat low.

Fed described the economy as slow and said employers remained reluctant to create jobs and Inflation somewhat low. 08 Nov 2010 UNITED STATES The ISM manufacturing index rose to 56.9 in October from 54.4 in September, led by growth in autos, computers and exported goods. The ISM non-manufacturing index rose to 54.3

More information

QFII Tax WFOE QDLP. Mandates. Cross-Border Updates: Quarterly Assessment April Great for the future. Prerequisite to success.

QFII Tax WFOE QDLP. Mandates. Cross-Border Updates: Quarterly Assessment April Great for the future. Prerequisite to success. Cross-Border Updates: Quarterly Assessment April 2015 Great for the future Prerequisite to success QFII Tax WFOE CGT on equity gains plus dividend and interest tax of 10% will be applied for QFIIs and

More information

Asia Bond Monitor November 2018

Asia Bond Monitor November 2018 January 9 asianbondsonline.adb.org Key Developments in Asian Local Currency Markets Japan s November industrial production was revised upward to.% year-on-year (y-o-y) from the preliminary estimate of.%

More information

Weekly FX Insight. Weekly FX Insight. Dec 30, 2013 with data as of Dec 27. Citibank Wealth Management. FX & Eco. Figures Forecast

Weekly FX Insight. Weekly FX Insight. Dec 30, 2013 with data as of Dec 27. Citibank Wealth Management. FX & Eco. Figures Forecast Citibank Wealth Management Weekly FX Insight Weekly FX Insight Dec 30, 2013 with data as of Dec 27 Market Review & Focus FX Analysis Weekly FX Recap 01 GBP/USD 03 USD/JPY 04 Weekly FX Focus 02 NZD/USD

More information

Advanced and Emerging Economies Two speed Recovery

Advanced and Emerging Economies Two speed Recovery Advanced and Emerging Economies Two speed Recovery 23 November 2 Bauhinia Foundation Research Centre Masaaki Shirakawa Governor of the Bank of Japan Slide 1 Japan s Silver Yen and Hong Kong s Silver Yuan

More information

The Renminbi: Why + How = Now

The Renminbi: Why + How = Now Excerpt from Insights 2013 The Renminbi: Why + How = Now Sridhar Kanthadai, Regional Head of Transaction Banking, North Asia Michael Vrontamitis, Regional Head of Product Management, Transaction Banking,

More information

Market volatility as we see it

Market volatility as we see it Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Economic Research, Strategic Management Mohd Afzanizam Abdul

More information

Interest Rate Policies for the People s Republic of China: Some Considerations

Interest Rate Policies for the People s Republic of China: Some Considerations Interest Rate Policies for the People s Republic of China: Some Considerations 1.The Objectives of Interest Rate Policies The rate of interest (and its term structure) is an extremely important instrument

More information

HKEX'S FIVE-YEAR CHINA MINISTRY OF FINANCE TREASURY BOND FUTURES THE WORLD'S FIRST RMB BOND DERIVATIVES ACCESSIBLE TO OFFSHORE INVESTORS

HKEX'S FIVE-YEAR CHINA MINISTRY OF FINANCE TREASURY BOND FUTURES THE WORLD'S FIRST RMB BOND DERIVATIVES ACCESSIBLE TO OFFSHORE INVESTORS April 2017 RESEARCH REPORT HKEX'S FIVE-YEAR CHINA MINISTRY OF FINANCE TREASURY BOND FUTURES THE WORLD'S FIRST RMB BOND DERIVATIVES ACCESSIBLE TO OFFSHORE INVESTORS CONTENTS Page Summary... 1 1. The openness

More information

China and Hong Kong Forex Market Developments RMB made the nine-month peak and FX reserves further expanded

China and Hong Kong Forex Market Developments RMB made the nine-month peak and FX reserves further expanded China and Hong Kong Forex Market Developments RMB made the nine-month peak and FX reserves further expanded August 217 Monthly publication Alicia Garcia Herrero Chief Economist Asia Pacific +852 39-868

More information

UBS Asset Management Professional clients only. Petroyuan. The shape of things to come. Hayden Briscoe, Head of Fixed Income, Asia Pacific

UBS Asset Management Professional clients only. Petroyuan. The shape of things to come. Hayden Briscoe, Head of Fixed Income, Asia Pacific UBS Asset Management Professional clients only Petroyuan The shape of things to come Hayden Briscoe, Head of Fixed Income, Asia Pacific 1 RMB-denominated oil contracts will begin trading for the first

More information

THE EMERGENCE OF THE RENMINBI AS AN INTERNATIONAL CURRENCY: WHERE DO WE STAND NOW?

THE EMERGENCE OF THE RENMINBI AS AN INTERNATIONAL CURRENCY: WHERE DO WE STAND NOW? Amundi Discussion Papers Series DP-18-2016 September 2016 THE EMERGENCE OF THE RENMINBI AS AN INTERNATIONAL CURRENCY: WHERE DO WE STAND NOW? Bastien DRUT, Philippe ITHURBIDE, Mo JI, Éric TAZÉ-BERNARD,

More information

Quarterly Economic Outlook: Quarter on 25 September 2018 Strong Economic Expansions amidst Uncertainty of Trade War

Quarterly Economic Outlook: Quarter on 25 September 2018 Strong Economic Expansions amidst Uncertainty of Trade War Foregin Direct Investment (Billion USD) China U.S. Asia World Quarterly Economic Outlook: Quarter 3 2018 on 25 September 2018 Strong Economic Expansions amidst Uncertainty of Trade War Thai Economy: Thai

More information

Asian Insights Third quarter 2016 Asia s commitment in policies and reforms

Asian Insights Third quarter 2016 Asia s commitment in policies and reforms Asian Insights Third quarter 2016 Asia s commitment in policies and reforms One of the commonalities between most Asian governments is the dedicated commitment they have in using policies and initiatives

More information

FTSE Emerging incl. China Overseas

FTSE Emerging incl. China Overseas FTSE Emerging incl. China Overseas non-r/qfii GDP Weighted Index Do you weight for the China A-shares inclusion? As the opening up of the Chinese equities market continues, international market participants

More information