This month, we are changing the descriptors for four asset classes. After another dismal month for investors in bonds and (especially) bond funds, we see that asset class as neutral: previously, the massive scale of flows had caused us to assess it as being hot. Gold and property are also asset classes that are now neutral, having been hot on the basis of developments through October. By contrast, improved returns and surging issuance of collective trusts means that we now see them as being a hot asset class. Previously, the assessment had been neutral.
Rising from $31.1bn in October to $33.8bn in November, China’s trade surplus is at the highest level since January 2009. This is in spite of the recent strength in renminbi, which appears likely to continue in the short term. Indeed, a factor that has been a major contributor to the rise in the surplus has been the slow growth of imports.
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.
A landmark issue by the government of British Columbia signals an improvement in the fortunes of the dim sum bond market in Hong Kong.
The quantity of offshore renminbi (CNH) deposits in Hong Kong has risen to new highs. This is partly due to easier liquidity conditions in mainland China and partly due to the general strength of renminbi.
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