Fastest growing capital market is offshore renminbi
Gaetan Gosset, director of product management at Euroclear Bank in Hong Kong, feels that recent developments to speed up the establishment of the offshore Rmb market will boost its appeal to issuers. October 04, 2011 | Gaetan GossetTo issue or not to issue is no longer the question. It’s just a matter of when and where. Investors, issuers and regulators are all closely eying the offshore renminbi (Rmb) market, which seems to be developing at a frantic pace. Each has a different objective, but their mutual dependencies will make or break the offshore Rmb market. Recent rumours that Chinese officials would endorse full convertibility of the Rmb by 2015 were quickly dismissed after China’s vice-prime minister confirmed China’s support of Hong Kong as the prime offshore Rmb centre. China is also putting in place measures to remove the remaining hurdles for issuers to repatriate to the Mainland funds raised in Hong Kong. This will undoubtedly stimulate the issuance of offshore Rmb instruments. After offshore Rmb deposits in Hong Kong became possible in 2003, deposits surged as a result of individual investors betting on the currency’s appreciation. At the end of 2010, trade finance transactions in Rmb by companies took the lion’s share. Offshore Rmb cash deposits were estimated at Rmb 572.2 billion ($89 billion) at the end of July 2011, while the market for securities denominated in Rmb is smaller at Rmb 200 billion ($31 billion) at the end of the third quarter, although it is growing fast. In fact, the Rmb was a more popular currency for company bond sales than the euro for the first time in the third quarter. Of the total amount of Rmb securities issued, 20% have been issued through the international central securities depositories (ICSDs) and 80% in the domestic market infrastructure. When looking at the number of issues, we see a 50/50 split between the domestic and international central securities depositories, evidencing the international nature of the market. These figures include bonds and fixed-rate notes, as well as equity-linked instruments and certificates of deposit. Due to its strong position as an international financial centre and hu... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: China, Exchanges, FX market, Hong Kong, Markets & Exchanges, RmbChina,Exchanges,FX market,HK,Markets Exchanges,Rmb, China,Exchanges,FX market,Hong Kong,Markets & Exchanges,Rmb, Keywords:Euroclear, Offshore Rmb, CSD, ICSD, Rmb Securities Euroclear, Offshore Rmb, CSD, ICSD, Rmb Securities
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