MAS unveils new measures to promote offshore RMB

MAS unveils new measures to promote offshore RMB

The Monetary Authority of Singapore will provide an overnight RMB liquidity facility to financial institutions from July 1. The move will facilitate growth of the offshore RMB offshore market in Singapore.

SINGAPORE: The Monetary Authority of Singapore (MAS) will introduce a facility to provide up to 5 billion renminbi (RMB) in overnight liquidity to financial institutions in Singapore as part of measures to boost the city-state's fast-growing offshore RMB market.

The overnight facility -- which will be launched on July 1 -- will give financial institutions the assurance that their short-term RMB funding needs will be met, MAS said in a statement on Friday.

The new facility will complement an existing facility that allows banks to borrow the Chinese currency on a term basis for trade, direct investment and market stability purposes.

MAS' announcement coincided with an directive issued by the People's Bank of China (PBC) Nanjing branch that said eligible corporates and individuals in the Suzhou Industrial Park (SIP) will be allowed to conduct cross-border RMB transactions with Singapore.

This means banks in Singapore will be allowed to lend RMB to corporates in the Suzhou park. Firms there can issue RMB-denominated bonds in Singapore, while equity investment funds in the SIP can directly invest in Singapore-based corporates.

"The introduction of cross-border RMB channels between Singapore and SIP will facilitate greater financing for companies operating in the SIP, encourage direct investment in corporates in Singapore and broaden the range of RMB activities that can be conducted out of Singapore," said MAS Deputy Managing Director Jacqueline Loh.

"We look forward to similar arrangements being put in place in the near future to allow cross-border RMB transactions between Singapore and Tianjin Eco-City," she added.

Singapore is the second largest offshore clearing centre for transactions involving the RMB, which is being used increasingly for trade and investments as China liberalises the use of its currency.


- CNA/ly

- wong chee tat :)

Bank of China's Singapore bond issue attracts strong interest

Bank of China's Singapore bond issue attracts strong interest

By Kevin Lim
POSTED: 26 Feb 2014 15:12

SINGAPORE: Bank of China's Singapore branch has successfully sold RMB 3 billion (S$619 million) worth of yuan-denominated bonds, in a sign of increasing appetite in the city-state for investment products denominated in the Chinese currency.

Bank of China's inaugural "Lion City" bond is the largest yuan-denominated bond issued in Singapore to date, the Chinese bank said in a statement on Wednesday.

Bank of China (BOC) sold RMB 2 billion worth of two-year bonds at a yield of 3.30 per cent, and another RMB 1 billion worth of five-year bonds at four per cent. The bonds will be listed on the Singapore Exchange.

The BOC issue, which has an 'A' rating from Fitch and an A1 rating from Moody's, was 2.96 times oversubscribed.

Singapore, the world third largest centre for foreign exchange trading, is striving to become a major offshore centre for the yuan as China steps up efforts to promote the wider use of its currency.

According to a recent Reuters report, about 18 per cent of China's total global trade is settled in yuan compared with two per cent in 2010.

- CNA/fa

- wong chee tat :)

Bank of China issues RMB 3 billion yuan Lion City bonds

Bank of China issues RMB 3 billion yuan Lion City bonds

2014-02-25

25 February 2014, Singapore - Bank of China Singapore branch (BOC) today issued Renmimbi (RMB) 3 billion ‘Lion City’ bonds, the largest Chinese yuan bond issuance in Singapore. The bonds will be listed on the Singapore Exchange.
With strong support from local and international institutional investors, the issuance was 2.96 times oversubscribed. The geographical composition of investors shows 52% coming from Singapore, 25% from rest of Asia and 23% from Europe. It was priced at 3.30% for the two-year bonds, 4% for the five-year bonds. Bank of China, DBS Bank, OCBC Bank Singapore and Standard Chartered Bank are joint book runners, with the Agricultural Bank of China Singapore Branch being co-manager.
BOC Singapore General Manager Mr. Zhang Qingsong said: “Bank of China’s ‘Lion City’ issuance reflects the continued internationalisation of RMB as a leading currency and Singapore’s increasing maturity as an offshore renminbi centre.
“As China’s most international bank with the largest renminbi cross-border transactions business, this issuance demonstrates BOC’s continued support for Singapore’s rapid development as an offshore renminbi centre.”
This is BOC’s third RMB bond issuance within its USD10 billion Medium-Term Note programme (MTN) which was assigned ‘A’ by Fitch Ratings and ‘A1’ by Moody's Investors Service. BOC released its first 2 billion RMB “Formosa Bonds” in Taiwan in December 2013 and 2.5 billion RMB offshore bonds in London in January 2014.
Operating under a Qualifying Full Bank License (QFB), BOC Singapore branch provides a wide range of services including deposit and loan banking, commodity financing, wealth management and credit cards.
Bank of China launched the BOC Cross-border Renminbi Index (CRI) in September 2013. The Index reached a historic high of 228 points at the fourth quarter last year, showing that RMB internationalisation process continues to accelerate.



- wong chee tat :)

Bank of East Asia boards express investment train to China

Bank of East Asia boards express investment train to China

[HONG KONG] Bank of East Asia, a commercial lender in Hong Kong, has been approved to invest in China's bond and stock markets in yuan as the world's second-largest economy steps up financial market liberalisation.

Participation from banks in China's Renminbi Qualified Foreign Institutional Investor (RQFII) will break the monopoly of local brokerage firms and fund houses, bringing in more competition as banks have large yuan deposits for investment.

Bank of East Asia (BEA), incorporated in Hong Kong in 1918 and with a market capitalisation of less than US$10 billion, will be allowed to invest in China's fixed income and A-share markets with yuan funds from the offshore market via the scheme.

Francis Ng, general manager and head of treasury markets division of the BEA, told Reuters it will use its own RMB funds to invest in the onshore market under RQFII.




- wong chee tat :)

Yangzijiang to trade shares in RMB on SGX's dual currency trading platform

Yangzijiang to trade shares in RMB on SGX's dual currency trading platform

    POSTED: 25 Jul 2013 1:01 PM
 
Singapore Exchange (SGX) announced on Thursday that Yangzijiang Shipbuilding will be the first company to trade its shares in renminbi (RMB) on SGX's dual currency trading platform.

SINGAPORE: Singapore Exchange (SGX) announced on Thursday that Yangzijiang Shipbuilding will be the first company to trade its shares in renminbi (RMB) on SGX's dual currency trading platform.

Yangzijiang's RMB-denominated shares will start trading on 5 August.

Magnus Bocker, CEO of SGX, said this is an exciting and positive development for Singapore as an offshore RMB centre. It also demonstrates how SGX is contributing to the infrastructure and capabilities required for issuers and investors to tap opportunities offered by China.

The exchange currently offers other services such as the listing and depository of offshore RMB bonds and the listing, quotation, trading, clearing and settlement of RMB-denominated securities.

SGX also offers China A50 index futures, the only offshore access to the China A-share market. 

- CNA/xq


- wong chee tat :)

ICBC in talks with S'pore banks to develop yuan products

ICBC in talks with S'pore banks to develop yuan products

    By Linette Lim
    POSTED: 05 Jul 2013 8:32 PM

The Industrial and Commercial Bank of China (ICBC) is in talks with Singapore's three local banks to develop yuan-denominated interest rate and exchange rate products. The bank also said significant progress on yuan internationalisation may take about 50 years to realise.

SINGAPORE: The Industrial and Commercial Bank of China (ICBC) is in talks with Singapore's three local banks to develop yuan-denominated interest rate and exchange rate products.

The bank also said significant progress on yuan internationalisation may take about 50 years to realise.

This downplays bullish expectations over the speed of yuan adoption in offshore yuan centres.

ICBC, one of the big-four Chinese state-owned banks, said large-scale usage of the yuan outside China is decades away.

To move the process along, it said there needs to be a wider range of offshore yuan-denominated investment products, as well as synchronisation between the onshore and offshore yuan markets.

Luo Xi, senior executive vice president at ICBC, said: "Right now, there is an offshore exchange rate and offshore interest rate for the yuan that differs from the domestic rates. People are using that as an arbitrage opportunity, so we need to coordinate these rates."

He also said that another way to speed up the process of yuan internationalisation is for more offshore yuan settlement centres to be opened.

But analysts said this need could dissipate with time, because it is widely expected that the Chinese currency will become convertible after 2015, and by then, no interim offshore centres will be needed.

Mr Luo was speaking at a conference organised by DBS in Singapore.

ICBC runs the sole yuan-clearing facility in Singapore, making the city-state only one of four jurisdictions in the world that can clear offshore yuan transactions.

Ng Nam Sin, assistant managing director at Monetary Authority of Singapore, said: "There are close to, I believe, 4,000 Chinese companies who have a presence in Singapore conducting trade and investments between South Asia and China. These companies have their banking relationships with banks in Singapore, so Singapore plays a very important (role as an) intermediation centre for trade finance, for investments."

Still, a number of issues could pose a challenge to yuan internationalisation.

These include the stability of China's financial system.

Andrew Sheng, president of Fung Global Institute and chief adviser to the China Banking Regulatory Commission, said: "If you were to look at household leverage in China, it's actually very low. If you look at the leverage of the government, it's not low but it's relatively low to the advanced countries and even to the comparatives within Asia. Where the leverage has occurred has been in so-called corporate sector, which would include the local government financing platforms."

The recent interbank liquidity crunch in China also revealed fragility in its financial system.

Standard & Poor's said it was a signal that the Chinese central bank will not "endlessly tolerate" reckless lending by some banks. 

- CNA/xq

- wong chee tat :)

Dim Sum bonds issued in Singapore

Dim Sum bonds issued in Singapore

    POSTED: 27 May 2013 10:48 PM
  
Standard Chartered Bank and HSBC are issuing yuan-denominated (Dim Sum) bonds for the first time in Singapore.

SINGAPORE: Standard Chartered Bank and HSBC are issuing yuan-denominated (Dim Sum) bonds for the first time in Singapore.

The announcement came as the Singapore Exchange launched its own yuan-clearing system on Monday.

Both banks are also known to be among the most aggressive players in the offshore yuan market.

Standard Chartered's offshore renminbi-denominated Senior Unsecured Notes are the first RMB bond deposited with SGX.

The timing of the bonds issuance coincides with the start of offshore yuan-clearing services by the Industrial and Commercial Bank of China (ICBC) on Monday.

This could help free up trade in the currency and make Singapore an offshore hub for Dim Sum debt.

HSBC Singapore has issued a two-year yuan bond at a yield of about 2.25%. The notes will raise 500 million yuan.

Matthew Cannon, the head of Global Markets at HSBC in Singapore, said in a statement that the issuance shows HSBC's commitment to further develop the offshore RMB market.

He added: "The funds will be used to finance the bank's expansion of RMB-based lending assets.

"This issuance will help open the market to other issuers looking to fund themselves internationally in RMB, offer new investment opportunities to the substantial pool of wealth managed in Singapore and assist in funding the rapidly growing RMB denominated trade business in Asia."

Standard Chartered raised 1 billion yuan through its 3-year note issuance with a yield of 2.625% after generating over 3 billion yuan in orders from 75 investors across Asia.

With settlement of the bond set for 31 May, Standard Chartered said it would be the first offshore yuan bond that is listed, cleared and settled in Singapore.

Standard Chartered's CEO Ray Ferguson said in a statement that he sees this as another step in Singapore's development as an offshore RMB hub.

"Singapore already leads as a regional treasury centre; is a springboard to Southeast Asia along the key trade corridor with China and provides a hub for Asian wealth management and commodities trading. Singapore's contribution to the development of the RMB is further enhanced by this issuance," he added.

The sales will be cleared through SGX's Central Depository, which provides clearing and settlement services for securities in Singapore.

Will Hedden, IG Market's senior sales trader, said: "There's a lot of money here from China that would be looking for somewhere to go, in that respect in the fixed income space. And these banks are really there to capitalize on it.

"It's another kind of sign that perhaps people are moving away from dollars and yen and euros and other what we would consider major reserve currencies around the world and looking to get exposure into China."

Previously, most of the trading was handled through mainland China or Hong Kong-based banks.

Singapore is set to compete with other trading hubs such as Taipei, Tokyo, Kuala Lumpur, London and Luxembourg in a market estimated to worth up to 360 billion yuan, or US$59 billion.

SGX's depository service adds to the exchange's current offering of listing, quotation, trading, clearing and settlement of RMB-denominated securities and listing of offshore RMB bonds.

Magnus Bocker, CEO of SGX, said in a statement:  "Our enhanced RMB capabilities support customers interested in the internationalization of the RMB and the growth of the Chinese economy.

"It will also complement the Industrial and Commercial Bank of China's yuan-clearing service to participating banks, which starts today (Monday).

"As Singapore's role as an international offshore RMB centre becomes increasingly important, customers coming to SGX can be assured of our commitment to keep growing and enhancing our suite of RMB and China-related products and services."

HSBC and Standard Chartered said they would manage their own sales.

Last week, DBS Group said it wants to issue yuan-denominated bonds to be cleared out of Singapore too.

- CNA/al

- wong chee tat :)

Chinese yuan hits record high on capital inflows

Chinese yuan hits record high on capital inflows

The Chinese yuan closed at a record high on Wednesday as authorities continue to nudge the unit higher to encourage capital inflows, analysts said.

SHANGHAI - The Chinese yuan closed at a record high on Wednesday as authorities continue to nudge the unit higher to encourage capital inflows, analysts said.

The yuan closed at 6.1939 to the dollar, stronger than the key 6.2 level and its best close since China launched its modern foreign exchange market in 1994, according to the China Foreign Exchange Trade System.

The Chinese currency also touched a record intra-day high of 6.1923 yuan.

China has faced pressure from the United States and other countries to allow the yuan to appreciate, claiming its value is artificially low.

Analysts said a stronger yuan would help attract further inflows of foreign capital, which picked up as China's economy has recovered, prompting authorities to keep the value high.

"Authorities have been worrying about capital inflows and outflows, fearing overseas capital that flew in earlier on optimism over the Chinese economy might leave the country," said Jiang Shu, an analyst at Industrial Bank.

"In the near term the currency may continue to appreciate," he added.

Recent data has indicated the pick-up in the world's second biggest economy remains fragile. China recorded a rare trade deficit of US$880 million in March, figures showed Wednesday.

The US Treasury last November stopped short of labelling China a currency manipulator, noting gains in the value of the yuan, but said the currency remains "significantly undervalued".

- AFP/ir

- wong chee tat :)

Singapore a test-bed for yuan products

Singapore a test-bed for yuan products
By Linette Lim | Posted: 15 March 2013 2218 hrs
     
SINGAPORE: Singapore's financial sector can be a test-bed for new yuan-linked products, according to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam who spoke at a banking industry forum on Friday.

The forum organised by the Financial Markets Association (ACI) was attended by over 700 delegates.

For instance, Mr Tharman said banks in Singapore can explore how to encourage offshore RMB bond issuance in Singapore with longer maturity tenors and different issuer profiles.

As the fourth largest foreign exchange trading centre in the world, Singapore can play an important role in integrating both the offshore yuan and Asian local currency markets.

This could be done through carrying out or booking trades in yuan or by developing yuan investment products.

He said: "While the US dollar will remain an integral global settlement currency, the renminbi (RMB) is likely to be increasingly used for trade denomination and contract pricing. As the (offshore RMB) market grows in multiple jurisdictions, regulators and market participants will have to work together to avoid fragmenting liquidity across markets and to promote efficiency in the offshore renminbi market."

While the yuan becomes increasingly important as a diversification currency for central banks and for trade among companies, the US dollar is seeing a gradual decline as an international reserve currency.

Still, experts said the dollar is likely to strengthen against other major currencies in the short to medium term.

Vice chairman of Blackrock, Philipp Hildebrand said: "Of course, we still have a current account deficit, but depending on what happens on the energy front, you can easily imagine the US moving into a current account surplus for the first time in decades, within a couple of years from now. Again that should be broadly supportive of the dollar."

So far, the US recovery is seen to be the firmest among the developed economies.

This could help reverse a long-term depreciation trend in the greenback that's been brought about by loose monetary policy.

Experts said out of the four major central banks, the Fed is most likely to discontinue monetary easing.

This could see global interest rates edging higher over the next few years.

- CNA/ck

- wong chee tat :)