Source: Reuters/Oleg Popov Chen Yanqing of China lifts 106kg in the women’s 58kg Group A snatch weightlifting competition at the 2008 Olympic Game in Beijing on August 11. A sense of enthusiasm is returning to the offshore renminbi markets. Singapore has just introduced renminbi clearing, already resulting in the first foreign-exchange trades to be cleared locally, and DBS and HSBC are now vying to be the first to offer locally settled renminbi bonds to the city state’s investors. Taiwan is a couple of steps ahead and cross-strait relations...Read more
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The internationalisation of China’s currency has gathered pace recently, but the mood in the overseas capital markets has been muted. As more barriers come down, both onshore and offshore investors will need to be ready for new opportunities.
China’s State Council has called for a plan for the full convertibility of the renminbi, raising hopes that the currency may be about to take its rightful place on the international stage. Authorities, however, have so far been cautious about opening up the capital account.
The bulk of offshore renminbi liquidity is still concentrated in Hong Kong, but the UK has a strong hand to play in the contest to become a global trading hub.
The implementation of renminbi clearing in Taiwan promises to create a new trading hub and offshore capital market for the Chinese currency. Liquidity in the local market, however, remains shallow.
A rebound in offshore renminbi bond issues has signalled a rise in confidence among investors. Falling yields are again making the product more attractive versus onshore rates, but is the increased interest here to stay?
The CNH market is emerging as an alternative even to the booming US dollar high-yield bond market, with a flurry of new issues in April from China’s property sector.
Despite recent steps to improve offshore liquidity and create a formal base rate for interbank lending, few borrowers are interested in borrowing in an appreciating currency.
Efforts to introduce renminbi-denominated shares in Hong Kong and Singapore have been on the backburner in recent months. However, market participants believe the foundations laid in the past six months will allow offshore renminbi stocks to take off in time.
