China

In this week’s round up of offshore renminbi news, Hong Kong’s deposits drop month-on-month, the dim sum market makes a recovery, and DBS sees flaws in China’s renminbi internationalisation plans.

China has been wary of opening its capital markets up to property developers, and for good reason. Yet regulators must consider the many upsides of reversing their hard-line stance.

A reduction in the reserve requirement ratio (RRR) is necessary in order for China to deal with its long-term structural liquidity shortage and the first cut could come as early as the fourth quarter, say experts.

Mainland property developers may get access to China’s onshore bond market for the first time since 2009, marking a departure from regulators’ hard-line stance on the sector in recent years.

Germany’s leading financial city has become the latest to openly state its desire to become an international hub for the renminbi. It is a logical destination, given that the European Central Bank is based there and Germany accounts for a major proportion of exports from the eurozone. ASIAMONEY speaks with a set of experts to discuss the potential.

China’s central bank has started promoting self-regulation, which will help expand the scale of trade-related transactions and increase the volume of cross-border RMB and FX transactions onshore.

Rabobank is to issue two uridashi bonds under its Agri bond label that supports funding for agribusiness in developing countries. Daiwa Securities is managing the South African rand and Australian dollar deals.

Far East Horizon broke the six-week lull in offshore renminbi bonds, responding to reverse enquiry to reopen its 4.5% March 2016 bonds and raise an additional Rmb300m ($49m).

In this round of recent regulatory news, China grants HSBC RQFII status, China further simplifies cross-border settlement rules, Hong Kong passes tax framework for sukuk issuance, India eases FDI limits on 12 sectors and Singapore permits banks to settle RMB using onshore exchange rates .

Hong Kong based asset managers such as J.P. Morgan AM, UBS GAM and AllianceBernstein are still waiting to find out if they will be granted an RQFII licence, as HSBC gets the go-ahead.

The upcoming audit shows there’s an urgent need for transparency on China’s debt situation, especially if it wants the rest of the world to have confidence in its economy.