China
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Currency swap lines established between China and other central banks is a useful step in the development of the renminbi offering, but will only have real meaning when it gets activated.
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Reforms promoting global investment into China’s onshore bond market will not detract from investor demand for dim sum, or from Hong Kong’s business as an RQFII centre.
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Commodity contracts may start to be denominated in renminbi once China allows convertibility of its currency especially as the country is the largest consumer of natural resources.
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The offshore renminbi market is growing and the investor base is alive to new products and new ideas, bankers said this week, in the wake of what they believe to be the first asset-backed dim sum deal. “It’s definitely a positive thing,” said one.
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In this roundup of offshore renminbi news, China’s central bank allows companies to extend cross-border loans, foreign banks get access to Shanghai’s free economic zone, and Canada makes a play to be an offshore RMB hub.
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The rise of offshore renminbi yields as a result of tighter liquidity and limited appreciation is likely to deter issuers from selling dim sum bonds in the second half, says the bank. -
China’s recent money market liquidity squeeze drove some banks offshore to hunt for cash, yet Hong Kong names were reluctant to lend due to the credit risks.
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Asia’s international bond market is not the only one reeling from a jump in yields that has culminated from fears that US Federal Reserve chairman Ben Bernanke is ready to taper quantitative easing.
