China

The Shanghai pilot free trade zone (FTZ) initiative provoked an unhealthy mix of early-days chest-thumping by Chinese authorities and dismayed booing on the part of disappointed foreign observers in 2014. In December emotions surrounding the FTZ were finally beginning to quieten down, but then came the announcement of not one, but three new FTZs.

Caisse d'Amortissement de la Dette Sociale is set for a market first this week, after mandating banks on Monday for what will be the first offshore renminbi bond from a French public sector issuer.

In this round-up, Société Générale opens Shanghai Free Trade Zone sub-branch, CSOP launches an RQFII government bond ETF, and China Construction Bank is likely to be next European RMB clearing bank.

With China's central bank finally starting to use the phrase "RMB internationalisation" to describe its efforts to promote the currency, the process looks set to enter a new stage this year. In contrast to earlier measures, the government's latest initiatives are all about encouraging capital and investment to go out into the wider world. That means it's time for China's domestic players to take a bigger role.

Australia and New Zealand Bank priced the first offshore renminbi-denominated Basel III bond from a non-Chinese bank on January 21. Not only did the Australian borrower achieve the size and pricing levels it was aiming for, but it also proved that funding in CNH can be cheaper than dollars, potentially triggering more non-Chinese lenders to follow suit, writes Narae Kim.

The Swiss National Bank announced on January 21 that it had received an Rmb50bn ($8.05bn) RMB qualified foreign institutional investors (RQFII) quota. Switzerland is the fourth European country to receive a quota, bringing the full size of the programme to Rmb820bn.

In what was its first ever official use of the term, the People’s Bank of China (PBoC) said in a statement on January 21 that it would promote "RMB internationalisation" in an orderly manner. This is the very first time that the PBoC has used the phrase in one of its formal communications, and the significance of its use has been recognised by market participants as indicating that the Chinese government may be ready for the process to enter a new stage.

The Shanghai-Hong Kong Stock Connect initiative should be framed within a broader agenda to set up a Walmart-style “mutual market” for China and Hong Kong, said Hong Kong Exchanges and Clearing (HKEx)’s chief executive Charles Li, speaking at the Asian Financial Forum on January 20.

Australia and New Zealand Bank (ANZ) started book building for a Basel III tier two dim sum bond on Wednesday, January 21. The deal will be a landmark as the first CNH-denominated Basel III trade from a non-Chinese bank.

The Shanghai Gold Exchange (SGE) and the World Gold Council (WGC) last week signed a Memorandum of Understanding (MoU) on a comprehensive strategic co-operation agreement. The WGC hopes that the joining of hands between the two will support the development of domestic and international gold trading in China by leveraging the opportunity provided by the internationalisation of the Chinese gold market through the Shanghai Free Trade Zone (FTZ).

China’s capital account liberalisations have set the stage for the next chapter of RMB internationalisation and its increased success as an investment currency, said panellists at a session of the 2015 Asian Financial Forum (AFF), currently being held in Hong Kong.

China is set to establish an offshore renminbi hub in Switzerland during a visit by prime minister Li Keqiang on January 20-21, according to domestic Chinese media reports. A Memorandum of Understanding (MoU) of official RMB clearing arrangements is expected, along with a Rmb50bn ($8.05bn) quota for the Renminbi Qualified Foreign Institutional Investors (RQFII) scheme.