INDUSTRIAL AND COMMERCIAL BANK OF CHINA ICBC ...o n s o f U S D Chinese renminbi Euro US dollar Offshore Trading Products Currency Spot Outright forwards FX Swaps Currency swaps Options
Post on 02-Jan-2021
2 Views
Preview:
Transcript
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
ICBC: Your Global PortalICBC: Your Global Portal
to RMB Marketto RMB Market
July 2012
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
1
Investment in RMB
General Introduction
Services Solution
Content
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
2
2003
General Introduction to Renminbi (RMB)
• RMB
– Renminbi (commonly abbreviated as RMB) is the official currency and legal tender in MainlandChina. The RMB is also referred to as Chinese Yuan. The currency symbol is "¥". The ISO codeused by SWIFT is CNY.
– The People's Bank of China (PBOC), China's central bank, is the authority to set and manage themonetary policy with regard to the RMB.
– For practical purposes RMB can be divided into two categories--CNY and CNH.
• CNY (onshore RMB)
– CNY (Chinese Yuan, onshore RMB) refers to RMB circulated and used (in cash and electronically)in Mainland China .
• CNH ( Offshore RMB)
– CNH refers to RMB circulated and used (in cash and electronically) outside Mainland China .
– The letter H in CNH stands for Hong Kong, since this was one of the first offshore centers wherethe CNY was allowed to circulate electronically.
– CNY remains the sole ISO code to identify the Renminbi globally.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Expanding use of RMB in Trade and investmentPromoting convertibility of RMB under capital accountRelaxing control on cross-border use of RMB by individuals
3
1993
2003
Sept2010
2009
RMB clearing service for personal customers in HK and Macau approved by PBOC
Pilot program: Shanghai and other four cities of Guangdong; Rules governing Cross-borderRMB settlement issued
Pilot area for cross-border RMB settlement expanded to cover whole Mainland China.
Overseas non-financial institutions allowed to open NRA RMB account in Mainland banksfor cross-border RMB business
Signing currency swap agreements with 12 countries/territories with a total value ofRMB841.2 billion
Aug2011
Signing local currency settlement agreements with 8 bordering territories
2008
General Introduction: Policy Overview
All importers and exporters in China will be able to settle cross-border trade in RMB, despitethe black list of PBOC.June
2012
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
4- 4 -
Channel of Overseas RMB Using Import from Mainland China or a third country RFDI Investment in China inter-bank RMB bond market Investment in China stock and bond market via RQFII Deposits Exchange to other currency
Channel of Overseas RMB Funding Export to Mainland China or a third country RMB financing from local market or Mainland China RODI from Mainland China RMB bond issuance in Mainland China and HK RMB purchase Currency Swap
Channel of Overseas RMB funding and using
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Singapore,
13%
Sw itzerland,
5%
Macau, 2%
USA, 2%
Indonesia, 1%
Other, 3%
Hong Kong,
74%
5
As of 31 Dec., 2011
About 63.7% Cross-border RMB settlementconducted with HK
As of 31 July, 2010
About 74% Cross-border RMB settlementconducted with HK
Current Cross-border RMB Settlement
By the end of 2011, 181 countries and regions have participated into cross-border RMB business.
By the end of 2011, the settlement volume hit 2.58 trillion yuan (409 billion US dollars) , representing 10% ofChina's total trade, while it was 3.6 billions yuan at the end of 2009.
Source: PBOC
Regional Distribution of Cross-border RMB Settlement Volume
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
6
Market update: onshore and offshore
According to PBOC,RMB settlements have reached 10% of China's trade at the end of 2011
RMB Cross-border Trade Settlement CNH Bonds market in Hong Kong
Sources: WTO
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
7
Sources: WTO
World payments currencies versus trade
Potential for the RMB development 1
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
currency distribution of the global foreign exchange market turnover
0.0
10.0
20.0
30.0
40.0
50.0
1998 2001 2004 2007 2010
year
%
US dollar Euro Chinese renminbi Japanese yen other currencies
8
Potential for the RMB development 2
Sources: WTO
World merchandise exports by region and selected economy
0.0
5.0
10.0
15.0
20.0
25.0
1948 1953 1963 1973 1983 1993 2003 2010year
%
United States Germany France China Japan
0.43%
Sources: BIS
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Turnover by currency pair in April 2010 had no major changes in ranking from three yearsearlier, although absolute turnover in the major currency pairs tended to increase.
USD/EUR remained by far the dominant pair (with a 28% share), followed at some distanceby USD/JPY with a slight increase to 14% of turnover.
USD/CNY represented only 1% of global foreign exchange market turnover.
Sources: BIS
Global FX Market Turnover by currency pair
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
10
Currency Swap between China and other countries
Partnercountry/region
Scale Signing date
Australia 2,000 2012-3-22
Mongolia 100 2012-3-20
Turkey 100 2012-2-21
Malaysia 1,800 2012-2-8
UAE 350 2012-1-17
Pakistan 100 2011-12-23
Thailand 700 2011-12-22
Hong Kong 4,000 2011-11-22
Korea 3,600 2011-10-26
Kazakhstan 70 2011-6-13
Uzbekistan 7 2011-4-19
New Zealand 250 2011-4-18
Singapore 1,500 2010-7-23
Iceland 35 2010-6-9
Argentina 700 2009-4-2
Indonesia 1,000 2009-3-23
Belarus 200 2009-3-11
19003435
12162
16513
2009 2010 2011 2012
RMB 100 Millions
Total Size of RMB Currency Swaps
Australia is the first developed entity to signa currency swap agreement with China.
The main purposes of the swap agreementare to support trade and investment betweenAustralia and China.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
11
Competition on offshore RMB center
Hong Kong is unrivaled in its role as the biggest RMB offshore center
Hong Kong has first-mover advantage in offshore RMB business, and the offshoremarket has a very good foundation and a comprehensive series of products.
Singapore aims to be 2nd RMB offshore center
As the only international financial center in the ASEAN, the RMB services in Singaporecover the entire ASEAN population of over 500 million, with high credibility.
Singapore possesses mature foreign exchange experiences and talent resources.
Hong Kong
London
Singapore
London has been in efforts to build the RMB Western center outside Asia
In January 2012, the joint announcement by the U.K. government and Hong KongMonetary Authority that they will work together to develop offshore RMB trading.
In April 2012, HSBC Bank plc launched in London the first international RMB-denominated bond to be issued outside China.
In April 2012, The London Metal Exchange is considering allowing its members to clearcontracts in China's yuan currency as part of plans to set up its own clearing house.
Recently the Government of the City of London released a report, customers in Londonand the inter-bank RMB deposits reached 109 billion yuan, of which the customerdeposits of $ 350 billion.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Recent China-Japan financial cooperation
Tokyo aims to promote itself as another offshore RMB center.
A framework about financial cooperation has been established at government level.
A joint working team striving for China-Japan financial market development will be created.
China-Japan financial cooperation has gained remarkable achievements
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
13
General Introduction
Investment in RMB
Service Solution
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
14
Advantages to invest in RMB 1
Why invest in RMB ?
Diversify theportfolio risk
In the context of the current international financial market turbulence, holdingRMB denominated assets can be an alternative choice to diversify the portfoliorisks.
RMB is welcomed by Chinese companies, and consequently it may make iteasier for French enterprises to reach their deal with Chinese counterparts.
Investment in RMB will facilitate French enterprises' market expansion in Chinaand help to set up its local market image.
Better way toaccess to China
Realize hedgingand appreciation
RMB exchange rate is relatively stable. In recent years, RMB has seencontinuous appreciation. In the long run, there is still room for appreciation.
RMB will deduct the trading cost and promote trading efficiency, and providewith French enterprises hedging capacity outside China.
New investmentchannel for higher
return
RMB can be invested in the RMB bonds in China mainland Bond/Equity Marketand the offshore RMB market to get higher returns.
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
Exchange Rate Indices, Jan 2010=100
Sources: WTO
RMB exchange rate is relatively stable and has seencontinuous appreciation.
Sources: IMF
Considering China’s growth perspectives, the risk for RMBdenominated assets is relatively low.
Advantages to invest in RMB 2
15
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
•Foreign institutions can buy onshore Chinese bond assets in two ways:- as a direct member of interbank bond market- under the QFII (qualified foreign institutional investors) program- relevant products provided by ICBC
Introduction to on-shore Bond Market
China’s Government Bonds Yields
Sources: Asia bonds online
Size and Composition of the LCY Bond Market (in RMB)
16
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
RMB Bondsin HK
Mainly short-to-medium term,ranging from 2 to 5 years
Tenor
Deals size is generally betweenRMB 1 billion and RMB 3 billion,depending on the financing needsof the issuer and the distributionpreference. The issuances by thefinancial institutions usually havelarger scale
Size
Including private banks, HKsubsidiaries of Chinese banks,insurance companies andindependent RMB funds
Investors
Fixed-rate in most of the cases
Coupon
RMB bonds can now be traded in HKex.RMB bond can be either traded publiclyor over-the-counter
Liquidity
Introduction to HK Offshore RMB Bond Market
17
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
0
20
40
60
80
100
120
Spot Outrightforwards
FX Swaps Currencyswaps
Optionsand others
type
billions
of
USD
Chinese renminbi
Euro
US dollar
Offshore Trading Products
CurrencySpot
Outrightforwards FX Swaps
Currencyswaps
Options andothers
US dollar 35.2 11.6 47.4 1.1 4.7
Euro 44.4 9.6 39.2 1.1 5.6
Chinese renminbi 23.7 41.6 19.9 0.2 14.6
Currency and instrument distribution of global foreign exchange market turnoverDaily averages in April, in billions of US dollars and percentages
Sources: BIS
18
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
19
General Introduction
Services Solution
Investment in RMB
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
20
33 countries and regions, 239 overseas institutions ( as of Dec. 31, 2011)
1553 foreign correspondent banks in 136countries and regions (as of Dec. 31, 2011)
Service Solution: Global Service Network
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
21
1st bank conducted USD/CNH swap deal
1st bank invested in the Chinese mainland inter-bank
bond market
One of the 1st banks for CNH HIBOR benchmark offering
One of the 1st banks for CNH SPOT benchmark offering
1st bank conducted red-chip Dim Sum Bond underwriting
1st bank issuing 10-Y CNH subordinated bond
Service Solution: Proven Off-shore RMB Services
Many 1st in HK CNH Business
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
22
Trade Finance
RMB L/C Financing
RMB Refinancing
Derivatives Trading
NDF; DF; CCS; Option
Deposit & Loan
RMB Deposit and Loan with
difference terms and maturities
FX/RMB Exchange
Exchange services for
both trade and non-trade,
on-shore and off-shore
FX/RMB conversion
Capital Market
Bond issuance,
underwriting or
investment; RMB
IPO; Fund in Trust
Cross-bordersettlementRMB fund settlementfor trade and non-tradepurposes.
Full Products in RMB business
Service Solution: Comprehensive Product Series
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
23
This report has been prepared solely for clients of ICBC and clients of certain affiliated
companies of ICBC on the basis that no part of it will be reproduced, transmitted or made
available to any other person. The information herein has been obtained from sources believed
to be reliable, but its accuracy and completeness cannot be guaranteed. No liability or
responsibility is accepted for any errors or for any negligence, default or lack of care or for any
loss or damage whatsoever that may arise from actions based on material contained in this
report. This document is not to be relied on as such or used in substitution for the exercise of
independent judgment.
Disclaimer
top related