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Increased activity boosts UK bank鈥檚 RGI
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Standard Chartered said yesterday its Renminbi Globalization Index ended last year at 1,377 in December, up 5.9 percent from the previous month and 84.1 percent year on year, driven by rising deposits and cross-border payments.
The expansion of new offshore centers, a further policy push and appreciation of the renminbi, or yuan, will continue to be key drivers for the index this year. “We expect the RGI to increase another 60 percent to reach 2,200 by year end,” the UK bank said in a statement.
RGI, a comprehensive index that measures the internationalization of the offshore yuan across markets, is the first industry benchmark that effectively tracks the progress of yuan business activity, according to the bank.
It offers corporations and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving the adoption of the yuan, the bank said.
The rise of the index rebounded quickly in the fourth quarter, triggered by the yuan’s appreciation and the liberalization in cross-border yuan lending regulations, it said.
Standard Chartered forecast the currency could appreciate over 2 percent against the US dollar by the end of 2014, which bodes well for higher accumulation of yuan deposits in offshore markets this year.
Yuan deposits in Hong Kong are likely to hit 1.15-1.2 trillion yuan (US$188.5-US$196.7 billion) by the end of this year, translating into a 34 to 40 percent jump, while Taiwan’s could reach at least 250 billion yuan, the bank said.
The prospect of yuan appreciation and ample offshore liquidity has underlined the dim sum bond market amid weak market sentiment.
Dim sum bonds issued in January hit a monthly record high of 63 billion yuan, and Standard Chartered said it expects strong primary issuance of 550 to 580 billion yuan for this year.
In 2013, London widened its lead over Singapore in terms of both average daily offshore yuan foreign exchange turnover and yuan cross-border payments, which offset London’s lack of yuan deposit growth.
London and Singapore now account for 13.4 percent and 9.7 percent respectively of activity tracked by the RGI, down from 10.6 percent and 10.7 percent a year ago.
Hong Kong, which started its offshore yuan business in February 2004, remained the biggest offshore yuan center, the bank said.
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