Why to Invest in RMB Denominated Assets?
China is now the second largest economy in the world, and at the current space of growth, it will represent 20% of the world’s GDP by 2030. The RMB is the fifth most used currency for the international payments and has gradually become a currency for investment and reserve. Moreover, based on the historical performance, China equity and bond markets have a low and sometimes even negative correlation to other major assets classes. For these reasons as well as long-term RMB appreciation expectation, investing in RMB assets is a good choice for benefiting the diversification of the portfolio and has become a priority of major asset managers.
What are the Eligible RMB Products Onshore and Offshore?
There are a plenty of RMB denominated financial products in China onshore market available for investors, such as equities, bonds, commodities, metals, futures, options and other derivatives. China equity and bond market are now the 2nd and 3rd largest in the world respectively. In the offshore RMB centres, more and more RMB products have appeared to cater to the needs of local and international investors. They range from deposit solutions, bonds, REITs, warrants and different types of funds.
How to Access to China Capital Market?
In addition to the Qualified Foreign Institutional Investors (QFII) scheme which was launched in 2002 and was the only channel available for investment in China capital market, more routes have been developed since the start of RMB internationalisation in 2009 such as Offshore Three Institutions, Renminbi Qualified Foreign Institutional Investors (RQFII), and Stock Connect etc.
Offshore Three Institutions, including RMB settlement banks, RMB clearing banks and central banks at the beginning, have expanded to other types of financial institutions such as Sovereign wealth funds and insurance companies. These qualified offshore financial institutions are allowed to invest in China Interbank Bond Market with a quota given by People’s Bank of China.
RQFII granted by China Securities Regulatory Commission, can trade securities in the Exchange market and interbank market with a quota given by SAFE.
Shanghai-Hong Kong Stock Connect allows both eligible institutional and individual investors of their respective markets to trade selected stocks in the each other’s market.
We expect that more channels e.g. Shenzhen-Hong Kong Stock Connect, Mutual Fund Recognition and Bond Connect shall be introduced for international investors in the future.
What can BNP Paribas help you for RMB investment?
BNP Paribas is among top 3 book runners of Dim Sum Bonds, and a market leader in both onshore and offshore RMB bonds dealing. Taking the advantages of its platforms, qualifications and expertise, BNP Paribas is able to cover all your needs about investment in both onshore and offshore RMB Capital market, including:
- Asset management solutions
- Derivative solutions
- Custody service
- Quota advisory service