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Standard Chartered Renminbi Globalisation Index Adds New York as Fifth RGI Centre

Published 

In recognition of its rising RMB payment flows, CNH FX turnover

Hong Kong – Standard Chartered announced that the Standard Chartered Renminbi Globalisation Index (Bloomberg: SCGRRGI ), or the RGI, rose to 1,475 in January, up 8.5% from the previous month driven by the inclusion of New York as our fifth RGI centre, strong deposit growth in Hong Kong and Taiwan, coupled with resilient performance in Dim Sum bonds despite heightened FX volatility.

New York is included as one of the RGI centres as a result of its rising Renminbi payment flows and CNH FX turnover. It enjoys time-zone advantage, massive trade with China, and rising investor interest in the Renminbi. Our recent trip to the US confirms that there is growing acceptance of the currency. Weighted average Renminbi-denominated cross border SWIFT payments through the US in January grew 422%, fastest on record. New York is key to serving corporates in the Americas that do not deal directly with, or run their regional or global treasury centres, out of Asia or Europe. The first-mover advantage in tapping the impending rise of commodity-centric Renminbi flows between China and Latin America is certainly New York’s to lose.

Other offshore centres continue to fare well in various fronts. London continues to be a clear outperformer in terms of cross-border Renminbi flows, now accounting for over 30% of all Renminbi-denominated SWIFT payments with China and Hong Kong. London is seeking the appointment of a clearing bank of its own.  The appointment should help London capture regional Renminbi flows and boost its deposit level, similar to the experiences of Hong Kong, Singapore and Taiwan.

Total Renminbi deposit in Taiwan grew significantly, and now accounts for 31% of foreign currency deposit, up from a mere 6% in February 2013. This shows strong interest among local residents in Taiwan to accumulate Renminbi assets and with potential to grow further on the back of potential FX gains and relatively higher interest rate yields on CNY. As such, we lifted our end-2014 Renminbi deposit forecast for Taiwan to CNY300 billion from the original projection of CNY250 billion.

Standard Chartered launched the RGI in November 2012. Prior to adding New York, the Index covered four markets in offshore RMB business: Hong Kong, London, Singapore and Taiwan. It measures business growth in four key areas: deposits (denoting store of wealth), Dim Sum bonds and Certificate of Deposits (as vehicles for capital raising), trade settlement and other international payments (unit of international commerce) and foreign exchange (unit of exchange). As the Renminbi further internationalises, there is capacity to include additional parameters and markets.

Standard Chartered Renminbi Globalisation Index

Objective

The first industry benchmark that effectively tracks the progress of RMB business activity.  Offers corporates and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving RMB adoption

Index Parameters

Deposits

Dim Sum Bonds and Certificate of Deposits

Trade Settlement & Other International Payments

Foreign Exchange Turnover

Markets

Hong Kong

London

Singapore

Taiwan

New York

Investability

Non-tradable

Frequency

Monthly

Base value and date

100 at 31 December 2010

Inception Date

14 November 2012

Methodology

Weight of each of the four parameters are inversely proportional to their respective variances

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