China is keen to promote the renminbi as an worldwide currency that is representative of Beijing’s growing economic and diplomatic clout in the world.
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To emphasise China’s selection of London as its preferred offshore renminbi financial centre in a non-Chinese timezone, Beijing is also planning a second tranche of renminbi bonds to be issued in London by the China Development Bank, the leading source of finance for overseas investment projects.
Issuing notes in London will help cement the city’s place as the dominant yuan hub for Europe as Paris and Frankfurt compete for a share of the market.
China’s foreign exchange market will “soon” extend the trading hours for the yuan to 11:30 p.m. Beijing time (3:30 p.m. GMT) to overlap with European trading hours, three sources with direct knowledge of the matter said on Wednesday.
And William Massachusetts of Gottex Asset Management shared the same view and said, “I think it’s a kind of much-needed positive signal, and it kind of reconfirms the Chinese government’s determination in terms of interest rate liberalisation and renminbi internationalisation”. “We are going to have more information about market sentiment on the onshore yuan during London hours”.
Banks took an 82 percent share, followed by funds at 12 percent and private banks at 6 percent. Hong Kong ranked fifth with 4.1 percent. “We should see more high-grade issuers tap the London yuan market so investors in Europe will become more familiar with Chinese names”.
Renminbi Qualified Foreign Institutional Investor quota, which allows yuan raised offshore to be invested in China’s domestic capital markets. Most of the offshore yuan bonds issued so far are listed on the Hong Kong Stock Exchange as Asian investors are still the main investors in yuan products.
The planned sale comes before President Xi Jinping pays his first state visit to the United Kingdom during the 19-23 October period.
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Citing officials familiar with the issue, the newspaper said the plan is to issue Chinese treasury bonds in renminbi in London after laying the foundations with earlier launches of short-term debt by the People’s Bank of China, the central bank. “The relations are definitely improving a lot”.
