Greater China

The opening up of the renminbi bond market could be as important and transformational for global capital markets as the launch of the euro.

Given that green bonds still account for a minuscule 1% of the total global fixed income market, it is supply that is needed most if the sustainable capital market is to gather the traction it needs.

Although Asia as a whole has been slow to embrace green financing standards relative to some parts of Europe, China stands out as having taken big strides towards greening its financial system. Green bonds are at the heart of this move with China’s market having the potential to be the largest in the world.

According to some, infrastructure in China is now so well developed that it is perhaps the Asian economy that has the least need for infrastructure investment. However, it cannot afford to slow down, not least because of the noxious state of its environment.

China’s One Belt, One Road project and rising supply of investable projects will help to underpin growing institutional demand for infrastructure assets in Asia, which in turn should drive the acceptance of public-private partnerships across the region.

As much as $60tr will need to be spent between now and 2030 just to plug the global infrastructure gap. The challenge of meeting this vast requirement will be all the more formidable given that solutions for doing so will be utterly pointless if they fail to incorporate sustainability safeguards to prevent further irreversible damage caused by climate change.

LME Clear, the clearing house for the London Metal Exchange, has launched a trade compression service and given members the ability to post metals warrants as collateral for the first time.

HSBC has appointed long-serving banker Montgomery Ho to the newly created role of chief executive for Guangdong as it seeks to solidify its presence in southern China.

November was a big month for the RMB qualified foreign institutional investor (RQFII) programme. One new jurisdiction, Malaysia, entered the arena, while Bank of China Luxembourg (BoC Luxembourg) and ICBC (Europe) became the first Luxembourg quota recipients.

Offshore renminbi funding costs have increased 100bp-150bp in recent weeks after China’s central bank shut down cross-border lending. The move was designed to reduce volatility in offshore renminbi (CNH) ahead of the IMF decision on its Special Drawing Rights basket, several offshore traders have said to GlobalRMB.

Dutch lender ING has appointed John Sprengelmeijer as its new Hong Kong branch manager from December.

While it’s a now presumed the renminbi will make it into the IMF’s Special Drawing Rights (SDR) basket, one thing still up for debate is the size of inflows into the currency. GlobalRMB rounds up some of the predictions in the market.