Deutsche Bank A brief guide to offshore RMB 1 Deutsche Bank Capital Markets & T
Deutsche Bank A brief guide to offshore RMB 1 Deutsche Bank Capital Markets & Treasury Solutions At the centre of RMB internationalisation A brief guide to offshore RMB October 2011 Deutsche Bank A brief guide to offshore RMB 3 Contents 1. RMB – becoming a global currency 4 2. Why adopt the RMB? 7 3. Debt capital markets 8 4. Foreign exchange and rates 13 5. Cross-border trade 16 6. RMB road map 19 7. Keeping informed 21 8. Deutsche Bank in China 22 10. Contacts 23 4 A brief guide to offshore RMB Deutsche Bank Becoming a global currency The internationalisation of China’s Renminbi (RMB) is arguably the most significant financial market development since the formation of the Euro. China’s global economic relevance contrasts starkly with the underrepresentation of its currency in international trade. The world’s second largest economy and its largest exporter, China represents a significant share of global foreign direct investment. Yet its currency comprises a mere 0.3% of all global FX turnover (BIS). China’s policy makers have made it clear they want this to change. Already, a number of measures to promote the use of RMB in cross-border trade, financing and foreign direct investment (FDI) have created a fully-functioning offshore RMB market in Hong Kong (CNH). For corporations, investors and financial institutions the opportunities are considerable. Currency risk can be neutralised by raising capital in the offshore RMB bond market to fund onshore subsidiaries. CNH bonds also offer a relatively competitive source of financing and the potential to tap a new investor base. Invoicing goods in RMB for Chinese buyers may provide competitive advantages and the potential for significant cost savings. Investors meanwhile gain unrestricted access to RMB assets through Hong Kong’s CNH FX, debt and equity markets. Why an internationalised RMB matters to you — Unrestricted offshore access to RMB trading, hedging and financing — Reduced FX hedging costs for inward/ outward investment — Lower transaction costs for foreign companies operating in or buying from China — Ability to hedge RMB exposure as its use in international trade increases — Greater investment choice and yield opportunities for CNH deposits — A diversified and competitive source of financing — Broader access to onshore buyers and suppliers — Lays the path for gradual RMB appreciation and eventual capital convertibility PBoC and other five authorities issued administrative rules for RMB settlement pilot scheme with HK, Macau and ASEAN countries PBoC issued regulation for implementing the administrative rules for RMB settlement scheme DB China acquired the qualifications to act as both domestic settlement bank and domestic agent bank 2008 2009 2010 2011 Premier Wen announced the pilot scheme of RMB cross border trade settlement with HK, Macau, and ASEAN countries Dec 08 PBoC and HKMA sign memorandum of cooperation for RMB cross-border trade settlement pilot scheme Jun 09 HKMA published guideline and circular on RMB business in HK July 09 Jul 09 Launch of the pilot scheme in five cities- Shanghai, Guangzhou, Shenzhen, Dongguan Zhuhai with HK, Macau and ASEAN Pilot scheme extended to 20 provinces and to trading partners from all countries SAFE issued BOP reporting notices for RMB trade settlement PBoC and HKMA signed a supplementary memorandum of cooperation of RMB cross-border trade settlement pilot scheme Jul 09 Jun 10 Dec 10 Jul 09 Aug 10 Jan 11 PBoC signed RMB 20bn bilateral cross currency swap agreement with HKMA RMB cross-border trade settlement pilot scheme extended nation-wide & Initial RMB 20bn Mini-QFII Program launched Aug 11 PBoC announced the pilot scheme for Outward- bound Direct Investment (ODI) in RMB Jul 10 MOFCOM and PBOC issue new circulars on RMB FDI Oct 11 Key Milestones of the Development of Offshore RMB Market Deutsche Bank A brief guide to offshore RMB 5 How global has the RMB become? Hong Kong now has a fully-deliverable offshore RMB market that gives foreign investors and corporations unrestricted access to China’s currency via cash accounts, FX, bonds, equities and through cross-border trade. Foreign companies can now invest in China with RMB obtained offshore (subject to approval) while approved onshore corporations can invest overseas using RMB. Regulatory approval for remitting and repatriating CNH onshore is still required however. CNH deposits reach a record CNH622bn CNH deposits and cross-border trade on the rise Hong Kong’s CNH deposit base reached a staggering 622bn as of September 2011 (HKMA). Growth was initially driven by retail deposits on the expectation of RMB appreciation, however corporations, investors and banks continue to increase their share of total deposits. RMB cross-border trade spikes in 2011 RMB cross-border trade between Hong Kong and China spiked in the 12 months to August 2011, from RMB38.5bn to RMB185.8bn (HKMA), or nearly 10% of total trade. This has been largely driven by the expansion of a trade settlement pilot programme that now allows companies from all Chinese provinces and municipalities to settle trade outside of China in RMB. China cross-border trade settlement volume (RMB bn) Three FX markets now exist for RMB Onshore CNY, which remains restricted for foreigners; offshore CNH, which is fully deliverable; and the USD- denominated non-deliverable forward market. Daily trading volumes in USDCNH now exceed USD2bn equivalent. Forward outrights (mid-rates) CNH capital markets kick into gear Corporations can freely raise RMB funds via Hong Kong’s CNH bond and equity markets with an established approval process for remitting proceeds onshore. The bond market has seen spectacular growth in 2011, with a broad range of issuers participating, including foreign multi- national corporations. The first CNH IPO has also been successfully listed. CNH bonds by issuer 0 100 200 300 400 500 600 700 0 50 100 150 200 250 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Size of HK-China cross-border settlement RMB Deposit base (rhs) 6.25 6.30 6.35 6.40 6.45 6.50 Spot 2M 4M 6M 8M 10M 1Y USD/CNY USD/CNH NDF 31-Jan-10 28-Feb-10 31-Mar-10 30-Apr-10 31-May-10 31-Jul-10 31-Aug-10 30-Sep-10 31-Oct-10 30-Nov-10 31-Dec-10 Q1 2011 Q2 2011 30-Jun-10 0 200 400 600 800 0 10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 Sovereign Policy Banks Commercial Banks HK Banks Foreign Banks Supranational Corporation Foreign Group Source: HKMA Source: Bloomberg, Deutsche Bank Source: Bloomberg, Deutsche Bank Source: HKMA, Deutsche Bank 6 A brief guide to offshore RMB Deutsche Bank What’s next? CNH assets to grow ten-fold by 2012 Deutsche Bank expects increased demand for RMB financing will see the amount of outstanding offshore RMB loans and bonds grow ten-fold to RMB700bn by the end of 2012. Going forward, the recent approval for foreign companies to remit CNH for investment onshore, rising RMB cross border trade, the competitive borrowing costs offered by CNH bonds, and a proposed scheme for foreigners to buy securities with RMB obtained offshore will be the key factors underpinning asset growth. CNH asset growth (CNHbn) Increased RMB cross border trade RMB cross border trade between China and Hong Kong is on the rise. Deutsche Bank expects monthly volumes to reach RMB250bn by October 2011, with 30% of China’s total trade to be transacted in RMB by 2015. The expansion of the RMB trade settlement programme in August 2011 to include all Chinese companies, adoption of the RMB by foreign corporations, growth in China’s nominal trade volumes and an increase in Chinese outward direct investment are expected to be the key drivers of future growth. RMB trade settlement volumes (forecast) Deposits to reach CNH2 trillion by 2012 Deutsche Bank believes growing volumes of RMB cross-border trade and the increased use of bank deposits for RMB lending and bond purchases (known as the ‘multiplier effect’) will see deposits reach CNH2 trillion by 2012. RMB deposits in Hong Kong CNH bonds as a reliable source of financing The CNH bond market is becoming more global, with corporations and financial institutions from 14 countries (outside of China) now issuing CNH bonds. Deutsche Bank expects CNH190bn of gross bond supply in 2011, with CNH bond market capitalization to grow to 50% of the Hong Kong debt market by 2015. As the CNH FX swap market becomes more liquid, the bond market has the potential to become a competitive source of financing for global bond issuers. CNH bonds / HK debt 0 200 400 600 800 1000 Bonds/loans by Chinese Bonds/loans by FDIs Bonds/loans for 3rd party use Trade credit Other (equities, MM, etc) Mar ‘11 End-2012 End-2015 0 500 1000 1500 2000 2500 1-Aug-13 1-Mar-14 1-Oct-14 1-May-15 1-Dec-15 1-Jul-16 RMB deposit (bn) Projected 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 CNH bonds/HK debt other than EFN&Ef bills CNH bonds/HK debt 1-Jun-07 1-Sep-07 1-Dec-07 1-Mar-08 1-Jun-08 1-Sep-08 1-Dec-08 1-Mar-09 1-Jun-09 1-Sep-09 1-Dec-09 1-Mar-10 1-Jun-10 1-Sep-10 1-Dec-10 1-Mar-11 1-Jun-11 1-Sep-11 1-Dec-11 1-Dec-13 1-Dec-14 1-Dec-15 1-Dec-12 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2011 2012 2013 2014 2015 CNY bn % of uploads/Finance/ rmb-guide.pdf
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- Publié le Sep 07, 2021
- Catégorie Business / Finance
- Langue French
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