Asia Pacific

South Korea officially kicked off its onshore Won (KRW) and renminbi (CNY) direct trading market on Monday (December 1) in Seoul, after the regulator announced the initiative last month. While the move is seen as another step in the building up of a local RMB market, Korean market participants said to GlobalRMB that the convertibility of the won in China’s onshore market is what would be needed to fully promote RMB internationlisation in Korea.

The Hong Kong Stock Exchange (HKEx) launched on December 1 three mini futures contracts denominated in RMB. Approximate notional value of the contracts traded in the first day of trading was Rmb187m ($30.4m).

The Singapore Exchange logged record volume of derivatives transactions in November with daily average trading volumes up 45% year-on-year, following the launch of the Shanghai-Hong Kong Stock Connect last month. This was primarily driven by FTSE China A50 futures and SGX FX futures in the Indian rupee and renminbi.

China’s recent surprise interest rate cuts and a conservative approach to deal size helped Bank of Communications Taipei Branch to price its Rmb2bn ($325m) Formosa bond tightly on Thursday. The deal, which was only the second four-tranche Formosa, was the first from a Chinese bank to feature a domestic Taiwan rating — although bankers said this had little practical effect on investors, who still looked at the parent’s credit.

Chinese real estate developer Carnival Group International Holdings tapped the offshore debt market for the first time on November 27, raising Rmb500m ($81.5m) via a dim sum bond.

The RMB Qualified Foreign Institutional Investor (RQFII) programme grew again in November, with China’s State Administration of Foreign Exchange (Safe) giving out four new licences and the China Securities Regulatory Commission (CSRC) assigning a further Rmb4bn in quotas to two institutional investors.

In this round-up: PBoC issues RQDII programme rules, RMB is used for more than 10% of China payments in 50 countries, 30 central banks hold RMB in their currency reserves, and Hong Kong renews its RMB swap agreement with China.

Australia's newly granted offshore renminbi hub status will enable it to build stronger cross-border linkages with China, its largest two-way trading partner, with big benefits expected for international RMB trade and investment, says Andy Whitford, Westpac Institutional Bank’s head of Greater China.

Australian fleet lease firm FleetPartners priced its third securitization since 2010 this week, offering investors a diversification opportunity after weeks of RMBS dominated issuance. However, Westpac is ready to redress the balance with its second RMBS of the year.

After all the hype, the reality was always going to be a disappointment. But the slightly subdued launch of the Shanghai-Hong Kong Stock Connect programme earlier this month, and in particular the minimal use of its southbound channel for mainland investors to buy Hong Kong stocks, has nonetheless surprised many observers. The northbound quota, meanwhile, is being slowly but steadily used up.

Bond investors are bracing themselves for what is widely seen as the last blockbuster trade of the year, with Industrial and Commercial Bank of China (ICBC) on the road for a $5.7bn additional tier one (AT1) deal. ICBC's deal, while slightly smaller than Bank of China's recent $6.5bn AT1, is nonetheless set to steal the spotlight through its triple-currency structure that includes a record-breaking offshore renminbi portion, writes Rev Hui.

The Export-Import Bank of Korea (Kexim) has completed its second CNH bond of the year with a Rmb1bn ($163m) offering that was split between a three year and a five year. While the order book was not big by Asian standards, the issuer was able to put it to good use and price an extremely tight bond.