China’s Offshore Renminbi – A Good Start To The Year For London
British Embassy Beijing
London develops further as the Western hub of offshore RMB. Three deals and fresh data in quick succession. Further fruits of the Chancellor’s Economic and Financial Dialogue in October.
Four recent events have given London a fillip in its efforts to become the Western hub for the Chinese Renminbi.
On 7th January, the British asset manager Ashmore become the first firm outside of Greater China to receive an RQFII license – a license to invest Renminbi into China’s bond and equity markets (necessitated by China’s strict capital controls). This means global investors can access China’s capital markets via London (rather than Hong Kong). This is the first of many expected licenses and was made possible by the Chancellor’s October visit which secured an RQFII quota for the UK.
On 9th January, Bank of China issued London’s largest-ever Renminbi bond (2.5 billion). This came only two months after ICBC (the world’s largest bank) issued a RMB 2 billion bond in London. These bonds mean global investors have a larger range of assets in which to invest their Renminbi, and contributes to developing London as an international financial hub. UK banks also won business from the deals: HSBC co-led the Bank of China’s bond, while Standard Chartered and RBS co-led the ICBC one. Now three of China’s “big four” banks have issued Renminbi bonds in the UK.
Also on 9th January, London Stock Exchange saw the launch of a Chinese exchange traded fund – the first in Europe to track China’s mainland exchanges (so-called “A-Shares”) which are normally only accessible to people within China.
Freshly released data on 16th January showed that the Renminbi market in London doubled over the first half of 2013. In each of the various types of financial activity, volumes were up; trade financing (240%), Foreign Exchange (100%), and RMB deposits (22% to RMB 14.5 billion). The data confirms London’s growth as a trading hub for Renminbi, though the quantity of deposits in the market is well short of Hong Kong’s RMB 800 billion.
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