HSBC has received approval from mainland Chinese regulators to invest renminbi onshore, the latest step in opening up China’s financial markets to overseas funds.
The bank’s asset management arm yesterday said that it had obtained a licence under China’s renminbi qualified institutional investor (RQFII) scheme, which will enable it to put renminbi into the country’s equity and bond markets.
The RQFII quota system was first established in 2011, to complement the better-known qualified foreign institutional investor (QFII) scheme. Under QFII, investors bring US dollars onshore, which they switch into renminbi to make investments.
RQFII licence holders can invest renminbi held offshore into China’s domestic markets. The licence is one tool for encouraging the use of the Chinese currency for international trade.
Previously, the RQFII scheme had been limited to offshore subsidiaries of mainland asset managers and brokerages. At the end of last month, only 22 licences had been granted.
But in March this year, the China Securities Regulatory Commission (CSRC) announced a loosening of restrictions to enable foreign funds based in Hong Kong and offshore branches of Chinese banks to apply for a RQFII quota.
HSBC’s licence approval is expected to be one of many, with a number of foreign banks and asset managers awaiting approval.
In another sign of the greater use of the Chinese currency in Asia’s capital markets SGX, the Singapore exchange, on Thursday said Chinese shipbuilder, Yangzijiang Shipbuilding Holdings, would be the first company to have its shares traded in renminbi on the bourse next month.
Earlier this month, Chinese authorities took further steps to widen the existing channels for international investment. The overall quota available under the QFII scheme was raised from $80bn to $150bn, while the RQFII programme was extended beyond Hong Kong to other offshore renminbi trading centres, such as London, Singapore and Taiwan.
The CSRC also removed rules on how quotas could be used earlier this year, freeing up fund managers holding either type of licence to invest in the equity and domestic bond markets. HSBC plans to use its newly obtained RQFII licence primarily to invest in China’s onshore fixed income market, which offers much higher yields than debt traded offshore.
新加坡交易所(SGX)周四宣布，中国扬子江船业控股公司(Yangzijiang Shipbuilding Holdings)的股票下月将成为该所第一只接受人民币交易的股票。这是人民币在亚洲资本市场用途扩大的另一例证。