Asia Pacific

Institutional investors are set to play a bigger role in China’s A-share market after the country’s regulator changed the approval process for setting up mutual funds into a register-based system.

The development of Frankfurt as an offshore renminbi business hub has leapt ahead in 2014, with the appointment of an official clearing bank, the first offshore RMB bond issues settled and listed in the city and the granting of an RQFII quota of Rmb80bn. Joachim Nagel, member of the executive board of the Deutsche Bundesbank, with responsibility for information technology and markets, talks to GlobalRMB about the progress already seen and his expectations for the future.

A recent memorandum of understanding signed between Bank of China (BoC) and the Japan Exchange Group (JPX) is expected to see the development of an RMB-denominated bond market as well as broader trading and clearing services.

HSBC Global Asset Management on Tuesday became the first international investment firm to launch an RQFII bond fund that will focus on the Chinese bond market. The firm will be using an RQFII quota that it was granted in 2013, and plans shortly to launch more products through its London business, which recently received its own quota.

The recent flurry of offshore renminbi activity in continental European cities has not damaged London's position as an RMB hub, although it needs the development of more investment products to fulfil its potential, argues Jinny Yan, London-based director of RMB solutions at Standard Chartered Bank.

Lai Sun Garment (International) is hitting the road this week for its inaugural offshore renminbi bond. The Hong Kong company is looking to venture into a market that has already generated a record volume of deals.

In this round-up, French and German corporates lead in offshore RMB usage, Standard Chartered's RMG Globalisation Index climbs 3.7% to 1,882 in May, and Hong Kong RMB clearing reached Rmb14,237bn in June, a 7.5% increase on the previous month.

Jinchuan Group priced its debut international bond, a three CNH issue, on July 10. The 4.75% bonds were reoffered at 99.724% to yield 4.85%, and the deal was the first time a regional state owned enterprise (SOE) had tapped the offshore RMB market via China’s National Development and Reform Commission (NDRC) quota system.

ITNL priced India’s first ever unrated dim sum bond on Thursday. The deal was capped at Rmb575m ($93m), with the proceeds being used to repay a loan in full.

Bookrunners Barclays and CLSA announced guidance on the three year dim sum bond at 8.375% area. The deal is capped at Rmb575m ($93m) and bankers say that books are growing very well.

Jinchuan Group opened books for a three year offshore renminbi bond with initial guidance at 5.05% area on Thursday morning. The deal marks the first time a regional state owned enterprise (SOE) has tapped the offshore RMB market via China’s National Development and Reform Commission (NDRC) quota system.

The appointment of new clearing banks in Paris, Frankfurt and Seoul, as well as the promised expansion of two way cash sweeping to all foreign corporates in China, should help boost non-Chinese offshore RMB issuance, analysts reckon.