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CC Funds - Currency swaps are lure for 'dim sum' issuers

More and more foreign issuers are expected to tap the offshore renminbi (CNH) 'dim sum' bond market this year thanks in part to favourable rates in Hong Kong's rapidly-growing cross-currency swap market. We believe that issuance by foreign issuers will be strong if liquidity in both these markets continues to grow, and US$/CNH cross-currency swap rates continue to rise faster than 'dim sum' bond yields.

Fall in China forex reserves adds pressure for liquidity easing

Data from the People's Bank of China (PBOC) published today shows a $20.6bn, or 0.6 %, fall in China's official foreign exchange reserves which slipped to $3.18tn in 4Q11. A fall in reserves in both November and December represents the first consecutive monthly fall since the first quarter of 2009. We think the figures show continued outflows of "hot money" and raise pressures for a further easing in domestic liquidity.

A turning point for renminbi internationalisation?

Investors who prefer to take a longer-term view on the renminbi can find comfort in knowing that Beijing is still eager to internationalise its currency.

Financial reform hit as "China sub-prime" concerns grow

Concerns over financial fragility, mixed with a conservative political atmosphere ahead of the 2012 political succession is hitting the pace of financial reform.

Renminbi going global

An imperative to prevent inflows of foreign exchange from blowing economic bubbles inside China acts as a strong impetus driving Beijing's campaign to internationalise the renminbi.

Promoting renminbi cross-border settlement

Renminbi settlement in cross-border trade and investment is set to be expanded as part of China's next "Five-Year Plan".

2011: a year of big change for the renminbi

Labour shortages, rising import inflation and a relatively permissive political atmosphere should make 2011 a notable year for renminbi appreciation and internationalisation.

China hikes bank reserves for 5th time this year

Beijing announced on Friday that it will raise banks’ required reserve ratio (RRR) by 50 basis points from November 29 to a record level of 18% for most banks. We think the move, coming just 10 days after it announced the last RRR hike, shows the deep disquiet in policy circles over China’s ballooning money supply and surging inflation.

How much will the renminbi appreciate?

Growing US and EU pressure on Beijing to allow the renminbi to appreciate has generated a surge of comment in China.

Exchange rate reform?

Domestic commentators discuss China's recent announcement on moving to a more flexible exchange rate policy and its implications for renminbi appreciation.

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09 Feb 2012

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China Confidential Funds, a new research service launched by FT China Confidential, is dedicated to illuminating the mainland fund industry. Our team of fund industry experts in Shanghai search out the interesting trends in fund performance, strategy, interactions with overseas funds, regulatory changes, distribution and management. We also use a proprietary system to track the emerging flows of Chinese money. Click here to find out more.

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