Nov 14, 2012
14 Nov 2012, Hong Kong – Standard Chartered today announced the launch of the Standard Chartered Renminbi Globalisation Index (RGI) – the first industry benchmark that effectively tracks the progress of Renminbi-based business activity worldwide. Scheduled for release on a monthly basis, the Index offers corporates and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving the adoption of the Renminbi (RMB) as an international reserve currency.
To complement the Index, Standard Chartered announced the results of its first quarterly Offshore Renminbi Corporate Survey, wherein companies across Asia and Europe shared their motivations and expressed a strong appetite for using RMB offshore in the next six months. Going forward, the survey will provide a qualitative indicator to forecast the direction of the market.
The Index covers three markets which dominate the offshore RMB business: Hong Kong, London, and Singapore. It measures business growth in four key areas: deposits (denoting store of wealth), Dim Sum bonds and Certificate of Deposits (as vehicles for capital raising), trade settlement and other international payments (unit of international commerce) and foreign exchange (unit of exchange). As RMB internationalises, there is capacity to include additional parameters and markets, aligning the Index with future development.
The Index works by sourcing data from several industry and official sources and leading providers of market data.
The index is based from December 2010, the point from which sufficient meaningful information became available to produce a reliable measure. The RGI shows that between December 2010 and September 2012 the internationalisation of the RMB saw a 7-fold increase. All four parameters and the emergence of new markets contributed to the impressive growth, with trade-settlement and other international payments being the key driving force behind the increase.
“We are delighted to continuously lead the market in the RMB space. Today’s launch for the first time offers market participants access to a global offshore RMB benchmark that provides insights into the developments in three of the largest offshore markets covering the main product sets,” said Karen Fawcett, Standard Chartered’s Group Head of Transaction Banking, who also sits on Standard Chartered’s RMB Steering Committee. “Our conversations with clients reveal their keen interest of how the currency is gaining traction and to better understand how to leverage key trends for further business development. This index will provide a critical view of the currency’s acceptance and offer clients various factors to consider while managing the RMB within their basket of working capital currencies.”
The Index shows that Hong Kong dominates the offshore RMB business, with a four-fifth share, while Singapore and London are emerging as the upcoming centres, each taking up a tenth of the market. Taipei and New York are expected to join this club in the coming years.
Benjamin Hung, Chief Executive Officer, Standard Chartered Bank (Hong Kong) Ltd said: “With the growing global relevance of the Chinese currency, we expect to see more offshore RMB centres developing in different regions, complementing each other to support the exciting growth of RMB activities around the world. Hong Kong will continue to play a nexus role in the internationalization of RMB, and stand to benefit from its strategic position as China’s window to the world.”
The Index’s surge over the past two years reveals the momentum behind the international adoption of the Chinese currency, despite the headwinds from the global economy. Although RMB deposits were the initial drivers, the other three components have emerged as key engines of growth of the RMB offshore market, with wider geographical use providing an additional incentive. This is reflected in the survey results where a majority of the respondents currently using the offshore RMB plan to use one or more of the other RMB products in the next six months.
“As our Standard Chartered Renminbi Globalisation Index highlights, the global RMB market has developed at a rapid pace over the past two years. Our survey suggests that this trend will continue. Our view is that the RMB is on an irreversible journey. It is becoming a major international currency that will play a substantial role in international trade and in central bank reserves,” explained Marios Maratheftis, Global Head of Macro Research, Standard Chartered Bank.