Asia Pacific

Direct onshore trading of the renminbi (RMB) and the Singapore dollar (SGD) is expected to kick off very soon, and could come as early as this month, two Singapore-based sources have told GlobalRMB.

The UK’s debut offshore renminbi bond — the first from a non-Chinese sovereign — was almost twice subscribed despite being Rmb1bn ($162.8m) bigger than market participants expected.

The Shanghai Stock Exchange (SSE) and the Hong Kong stock exchange (HKEx) completed another round of system testing on October 11, ahead of a rumoured October 27 launch. But issues concerning A-share stock sales and China tax requirements are still being worked on by regulators.

Germany has signed comprehensive economic agreements with China worth $18.1bn as part of premier Li Keqiang's European tour, while Russia has obtained an Rmb150bn swap line. The Russian financial sector, including the Moscow Exchange and lender VTB, has also stepped up its China relationship with a number of co-operation agreements.

Yunnan Energy Investment’s hopes of pricing its first offshore renminbi bond appears to be bleak with books yet to be covered after one day of bookbuilding.

The UK showed the enticing possibilities of the offshore renminbi market for sovereigns after it drew more than Rmb5.5bn ($900m) of orders to a debut deal that was priced at the tight end of guidance. Such was the strength of the demand that the sovereign was able to print Rmb3bn — Rmb1bn more than had been expected by market participants.

The UK looks to have laid down a serious marker for other sovereigns wishing to follow it into the offshore renminbi market, with the book on its debut deal over twice subscribed and guidance well inside initial price thoughts as of Tuesday morning London time.

The UK government opened books for its debut renminbi-denominated bonds on October 14. The three year deal was first offered with price guidance in the area of 2.9%, before being cut to 2.75% area in the late afternoon Hong Kong time.

The UK government's landmark RMB bond is grabbing attention this week, but financial market participants are already looking at the next steps, with panda and green bonds seen as possible next areas of focus for Chinese capital account liberalisation, according to HSBC.

China is keen to step up the pace of internationalising the renminbi - and European governments are keen to help. France is preparing to issue a renminbi bond, three banking sources have told Emerging Markets, a sister publication of GlobalRMB. Luxembourg is also considering a deal, one said.

The UK is gearing up to become the first government, apart from China, to sell a renminbi bond, in a deal that could come as soon as next week and be worth Rmb2bn.

Falling commodity prices have hurt Mongolia’s economy, which relies heavily on its abundant natural resources. Improving relations with China are helping it through the squeeze but the country has yet to show its true potential to global investors