Increasing degree of internationalization of RMB in Hong Kong

More on Hong Kong Stock Exchange has issued a circular to promote the stock brokerage accounts, etc. to accelerate the opening of RMB, the yuan was later trading and settlement process of preparing to test it.

Experts believe that offshore renminbi back to the mainland with a channel set up, further opening up of capital markets in Hong Kong Renminbi yuan overseas use and acceptability is further increased, the increasing degree of internationalization.

Limited return of offshore renminbi

Bank of China announced limited opening of the 17th inter-bank bond market, the mainland, three types of overseas financial institutions, including Hong Kong and Macau RMB clearing bank, Bank and other foreign participation in the central bank and monetary authorities overseas, has been approved in the Mainland in the interbank bond market transaction.

News triggered enthusiastic responses Hong Kong market. Regulatory agencies, financial institutions and the industry have commented interpreted that the mechanism of offshore renminbi back to the Mainland began to build, Jinguanjishi limited impact, however, to stimulate international Touzi Zhe Jiang yuan increase in right possession, to speed up the RMB as an international investment and the development of a reserve currency for the future lay the foundation for the internationalization of RMB.

Hong Kong Monetary Authority Chief Executive Norman Chan said the new arrangements for Hong Kong's renminbi funds and financial institutions, opening a way out investments in the Mainland, Hong Kong can contribute to the further development of renminbi-denominated trade transactions and increase the offshore renminbi business in Hong Kong's attractiveness.

Goldman Sachs in a research report that this arrangement of the construction of the Hong Kong Centre for the benefits of offshore renminbi doubt. As more investment opportunities and choices, Hong Kong banks may be more willing to learn from RMB deposits, which further attract the RMB funds accumulated in Hong Kong for the future lay the foundation for the internationalization of RMB.


More importantly, it demonstrates the Hong Kong market has exceeded RMB trading settlement plans now for the offshore renminbi back to the local community to provide a formal channel for the flow of funds. This has created a Hong Kong bank intermediary role, agencies may benefit expected to include BOC Hong Kong, HKEx, HSBC Holdings, Standard Chartered, Hang Seng Bank and Bank of East Asia.

Allow the return of offshore renminbi, the mainland's long-term bond market is not without benefits. CICC that the short term, foreign currency funding of small and limited amount of investment in the Mainland market, so the impact of the mainland interbank market is very limited.

Medium and long term, given the inter-bank bond yields significantly higher than that of RMB in Hong Kong market, which will attract funds back to the mainland has continued to invest in the mainland renminbi bond market power, thereby increasing the mainland interbank market sources of funding, sophisticated investors structure, long-term bond market is conducive to the development of the Mainland.

Increase the degree of recognition outside of RMB

Accept limited offshore renminbi back soon, immediately welcomed the first foreign-funded enterprises in Hong Kong to issue renminbi bonds.

Global food giant McDonald's chain of 19 commissioned by Standard Chartered Bank issued 3-year renminbi-denominated bonds to raise funds for the amount of 200 million yuan, raising proceeds will be used to develop business in the Mainland. Standard Chartered Bank said the market reflected the warm, short period of time that is recorded in the over-subscription, and Standard Chartered are themselves investors.

McDonald's as well-known multinational brands, corporate bond issuance of RMB in Hong Kong's move also caused the market hot. Andrew Fung, general manager of Hang Seng Bank, that although the bond issue was smaller, but more symbolic. As a multinational giant McDonald's prices, an international high credit rating can not only increase the RMB in the international recognition, improve the RMB bonds attractive to foreign investors, will boost their holdings of yuan, but also reflect Hong Kong's RMB capital market further open renminbi bonds in Hong Kong market will help diversify and strengthen Hong Kong offshore renminbi center.


He is expected back with the mechanism of the yuan to gradually improve in the future there will be more multinational corporations to issue bonds in RMB.

However, the Bank of China International Executive Director and head of debt capital markets, Li Jianmin also pointed out that, in addition to McDonald's, the previous cooperation and roads in Hong Kong only had the yuan corporate bond issue. Currently only two companies of the bonds is not sufficient to establish the RMB yield curve in Hong Kong for the RMB in the future issue of corporate bond pricing. However, when there are more different credit rating of enterprises in Hong Kong issue bonds of varying maturities, the market will provide clearer pricing guidelines.

Laying the foundation for the internationalization process

Renminbi bond market in Hong Kong, while accelerating the development of the RMB trading listed securities market development is also to step up preparation.

HKEx has issued a circular to brokers in Hong Kong, to remind the logistics system and update as soon as possible to open RMB accounts, and later with the brokerage firms that will be on the yuan trading and settlement process for testing.

Many Hong Kong brokerage did not feel a sudden, that has already started preparing. However, the Standing Committee of the Hong Kong Securities Institute Lin, general manager of Fulbright Securities cum often read that if the renminbi-denominated bonds listed on the first stage is due to the current needs of customers in this market may be limited, need more time to understand what the initial product, before deciding whether to immediately to relevant support facilities.

In fact, in Hong Kong, the process of building an offshore yuan market, the recent series of news really overwhelmed some of the market. HSBC Group released a report that some recent initiatives in fact more limited immediate impact, is to gradually improve the RMB in real terms and acceptability for use outside, lay the foundation for future international.

However, the medium term, the renminbi offshore use and acceptability of the increase, the impact of the global monetary system, a far-reaching. Previously, the lack of a sound offshore yuan market, the yuan's internationalization process subject to some restrictions. Now, as holders of offshore investment options to increase the yuan would help to further encourage parties to use the existing channels to the offshore accumulation of RMB outside.