The strength of renminbi in the recent past is clearly expected to continue. Offshore renminbi (CNH) deposits in Hong Kong have been surging. This is at a time when the Hong Kong Monetary Authority (HKMA) has raised concerns over rapid growth in lending by the banks. It is highly likely that at least some of the increased deposits will find their way to CNH-denominated dim sum bonds.
Chinese banks are facing a number of challenges as the authorities in Beijing seek to crack down on the various excesses of the last few years. This is clearly having an impact on the banks’ performance metrics: as a result, they are in need of capital. In turn, the Hong Kong IPO market has received a boost on the back of this.
A landmark issue by the government of British Columbia signals an improvement in the fortunes of the dim sum bond market in Hong Kong.
Trading in RMB grows
As China continues to internationalise its currency, a small but growing number of multinationals are now using renminbi in cross-border trade.
Denise Law is a researcher for Renminbi Compass in Hong Kong. (4m 13sec)
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