China

Australian financial institutions are facing a much brighter future in China, after a free trade agreement opened up the possibility of easier access to the country's banking system. But for now the main opportunities are still going to lie offshore — and, in particular, with the mouth-watering possibilities of the offshore renminbi market. Matthew Thomas reports.

The China Securities Regulatory Commission (CSRC) added ten new names to the list of RMB qualified foreign institutional investor (RQFII) licensees in January, while the State Administration of Foreign Exchange (Safe) approved quotas for four South Korean firms in February. With RQFII gradually being rolled out to more regions in the world, market participants have realised that banks are able to play a much bigger role than just being custodians.

In this round-up, RQFII participants to get stiff tax bill, A-share short selling starts on the Stock Connect next week, HKMA revises its RMB liquidity facility, new free trade zone launches are now just days away, and the Hungarian central bank launches an RMB initiative.

Market participants are eagerly awaiting more details of China's new “One Belt One Road” programme, which they expect to be released at the upcoming National People's Congress (NPC). The reforms are set to take inspiration from the Shanghai FTZ experiment.

Goldman Sachs is set to list the longest tenor Formosa bond on March 3. The Rmb525m ($84m) 12 year deal, which had a formal pricing date of February 3 but was conducted with very little fanfare and has only just come to the attention of market participants, is also notable for being a zero coupon issue.

The Hong Kong government will be working with mainland authorities to launch a stock link with Shenzhen and to increase its RQFII quota, Hong Kong financial secretary John Tsang said in the annual budget speech.

Woori Bank and Korea Expressway Corporation (KEC) are planning to launch their debut Formosa bonds in March, adding two more Korean names to the list of international issuers in Taiwan’s renminbi bond market, sources close to the deals have told GlobalRMB.

Commonwealth Bank of Australia (CBA) is set to meet fixed investors early next month for what looks to be the third Basel III bond from a non-Chinese bank in the offshore renminbi market.

Goldman Sachs is set to list the longest tenor Formosa bond on March 3. The Rmb525m ($84m) 12 year deal, which had a formal pricing date of February 3 but was conducted with very little fanfare and has only just come to the attention of market participants, is also notable for being a zero coupon issue.

The International Monetary Fund (IMF) could give the RMB a much needed credibility boost this year by including it in its special drawing rights (SDR) facility.

DBS's renminbi DRIVE index fell in the last quarter of 2014, according to the latest report from the Singapore-based bank. The index, which tracks the popularity of the currency among Hong Kong corporates, fell to 57.2 from 58.1 in the previous quarter due to poorer business performance.

HSBC’s 2014 results underline the pain the bank has suffered from multiple conduct failures, as it swallowed $3.7bn of fines, settlements, customer redress and provisions through the year.