Standard Chartered Renminbi Globalisation Index Up 2.4% in Oct on rising HK, Taiwan offshore deposits

Published 

London enjoys fast-growing cross-border Renminbi payments 

Hong Kong – Standard Chartered today announced that the Standard Chartered Renminbi Globalisation Index (Bloomberg: SCGRRGI <index>), or the RGI, rose 2.4% in October to 1,220 from September, translating into a 69.4% year-on-year growth.

The latest RGI reading confirms that offshore Renminbi market is regaining momentum following a soft patch in late second-quarter and early third-quarter, with the key driver being a rise in offshore deposit, fuelled by a resumption of Renminbi appreciation and a strong uptake in cross-border intercompany lending denominated in the Chinese currency. We believe such cross-border lending, which has enjoyed a strong start since its July launch, will remain a major driving force in creating offshore Renminbi deposits in the coming months and beyond.

We revised our end-2013 forecast for Renminbi deposits in Hong Kong to CNY830 billion from CNY 750 billion. Taiwan is also likely to end 2013 on a high note towards the high side of our CNY100-150 billion forecast. We believe overall size of Renminbi deposit in Taiwan will likely double to CNY250 billion by end-2014.

Supported by the recently launched Renminbi-clearing, London could see further growth in cross-border payments denominated in the Chinese currency. Corporates will enjoy direct domestic access to Renminbi clearing and liquidity. UK banks will form a network of nostro accounts for clearing purposes, creating a pool of regional Renminbi flows that would otherwise be redirected to Asia. Financial institutions and group treasury centres operating in the Western time zone can take advantage of London’s offshore Renminbi market. As the only clearing centre outside of Asia, London can provide domestic Renminbi clearance services to companies during Asian national holidays. London is among the fastest-growing Renminbi payments centres outside of Hong Kong. Payments through London have risen almost six times since January 2012, accounting for 30% of all Renminbi-denominated SWIFT payments to China and Hong Kong.

Standard Chartered launched the RGI in November 2012. The Index covers the top four markets in offshore RMB business: Hong Kong, London, Taiwan, and Singapore. 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

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