unravel the complexities of rmb internationalisation€¦ · public unravel the complexities of rmb...
TRANSCRIPT
PUBLIC
Unravel the complexities of RMB Internationalisation
The Rising Role of RMB-
A Corporate Perspective
24 May 2012
P.2PUBLIC
1. RMB Internationalisation Overview
A Global Trade Currency
A GlobalInvestment Currency
A Global Reserve Currency1 2 3
JUNE 2009Pilot launch of cross-border RMB trade settlement scheme
JUNE 2010Expansion of cross-border RMB trade settlement scheme
AUGUST 2011Announcement on further expansion of the scheme to nationwide
Mar 2012Announcement to abolish the MDE requirement
JULY 2010Foundation of the offshore RMB (CNH) market in Hong Kong
AUGUST 2010Onshore RMB inter-bank bond market opened to selected offshore RMB Financial Institutions
JANUARY 2011Mainland Enterprises can make overseas investment in RMB in the form of ODI
AUGUST 2011*
Hong Kong enterprises can invest in Mainland securities under the RQFII channel
Mainland companies can issue RMB bonds in Hong Kong
Mainland investors can buy Exchange-Traded Funds linked to Hong Kong stocks
OCTOBER 2011
Formalization of RMB Foreign Direct investment (FDI)
Sep 2011Nigeria announces plans to invest 10% of its foreign exchange reserves into RMB
MAR 2012Japan received approval to purchase RMB65bn Chinese government debt
By the 2020sRMB to be accepted across the world as an international currency, paving the way for full convertibility and reserve currency status?
* Exact implementation timeline to be announced
P.3PUBLIC
2. RMB Trade and Deposit Volume Growth (Hong Kong)
0
50
100
150
200
250
300
Jul-09
Aug-09Sep-09Oct-
09Nov-09Dec-0
9Jan-10Fe
b-10Mar-1
0Apr-1
0May-1
0Jun-10
Jul-10
Aug-10Sep-10Oct-
10Nov-10Dec-1
0Jan-11Fe
b-11Mar-1
111-A
pr11-M
ay11-Ju
n11-Ju
l11-A
ug11-Sep11-O
ct11-N
ov11-D
ec12-Ja
n12-Fe
b
0
100
200
300
400
500
600
RMB Trade Settlement Vol (Monthly)
RMB Market Deposits
RMB
Billi
on
RMB
Billi
on
RMB Trade Settlement figure is for trade settled in Hong Kong Source: PBoC, HKMA, CEIC, HSBC
As of February 2012> RMB 2,600bn of China’s trade settled via Hong Kong
2011 (RMB1,915bn) has more than 5x of 2010 (RMB369bn)
> RMB 560bn Deposit in Hong Kong
Nearly 2x compared to the beginning of 2011 (RMB 315bn)
About 10% of total Hong Kong deposits
P.4PUBLIC
3. RMB Market Potential
Notes: (1) HSBC Trade Confidence Index -
Oct 2011(2) HSBC RMB Cross-Border Trade Settlement Survey 2011(3) HSBC in-house estimates
2010-2011| 2013-2015| 2015-2020|
After USD and Euro, RMB is expected to replace GBP as the 3rd popular currency for trade settlement globally
(1)
Nearly 8 in 10 businesses in mainland China
which have not yet started to use RMB to settle cross-border trade are planning to use or adopt it conditionally in their future transactions (2)
More than
USD 2 trillion or
one half of China’s total trade flows with emerging markets expected to be settled in RMB by 2013 to 2015 (3)
Further financial reform
to put internal financial house in order (3)
Paving the way for full RMB convertibility (3)
P.5PUBLIC
Payables and Receivables
Asset and Liabilities
Foreign Exchange Cost
Currency fluctuation premium
Administrative Process
Customer Base
Currency portfolio
Risk Exposure
SAVE
HEDGE
DIVERSIFY
GAIN
Potential RMB Appreciation
Onshore / Offshore Investment Returns
Importer/Exporter Relationship
4. Potential Benefits for Your Company
P.6PUBLIC
DIVERSIFY GAINHEDGE
4.1 Benefits for Overseas Exporters
Natural hedge of RMB position for future payments
Flexibility to exchange the received RMB back to other currencies
Access to a wider importer base who might otherwise have limited access to foreign currency and adverse to FX risks
Currency portfolio and risk exposure profile
Secure / maintain buyer relationship
Potential RMB Appreciation
Accumulating RMB offshore for future investment
Exporter(Overseas)
Importer(China)
Goods
RMB Payments
P.7PUBLIC
HEDGE
Natural Hedge of RMB position for receivables in the same currency
SAVE
Save unnecessary FX cost as payables and receivables are in one single currency
4.2 Benefits for China Importers
Exporter(Overseas)
Importer(China)
Goods
RMB Payments
P.8PUBLIC
SAVE
By eliminating the FX concern of the exporters in China, importers may save the “currency fluctuation premium”
in the RMB quotation of up to 5-7%
DIVERSIFY
Access to a wider exporter base who might otherwise have limited access to foreign currency and adverse to FX risks
Currency portfolio and risk exposure profile
GAIN
Secure / maintain supplier relationship
4.3 Benefits for Overseas Importers
Importer(Overseas)
Exporter(China)
Goods
RMB Payments
P.9PUBLIC
SAVE GAINHEDGE
4.4 Benefits for China Exporters
Natural Hedge of RMB position for payments in the same currency
Save unnecessary FX cost as payables and receivables are in one single currency
Save administrative process in applying for export tax rebate
Accumulating RMB onshore for: Onshore RMB investment Potential RMB Appreciation
Importer(Overseas)
Exporter(China)
Goods
RMB Payments
P.10PUBLIC
1. Can I pay or receive in
RMB? When?
2. Do I need an RMB account?
Where?
3. What to do with idle RMB?
How?
ONSHORE
5. Applying RMB in Your Business
OFFSHORE
P.11PUBLIC
5.1 Can I pay or receive in RMB? When?
1.
Trade payments for GOODSMainland Enterprises with Import and Export qualifications may export goods in RMB*
2. Trade payments for SERVICES
Allowed (contract and invoice in RMB required)
3.
Intercompany loansAllowed (subject to SAFE filing)
4. Additional Capital Infusion
Allowed (subject to MOFCOM approval)
5.
Foreign Direct InvestmentAllowed (subject to MOFCOM approval)
6.
Expatriates SalariesNot Allowed
1.
Trade payments for GOODS
Allowed (contract/invoice/customer declaration required)
2. Trade payments for SERVICES*Allowed (contract and invoice in RMB required)
3.
Intercompany loansCase-by-case approval by PBOC/SAFE
4.
Capital investment overseas (ODI)Allowed (subject to MOFCOM approval)
5.
Dividend Payments / Repatriation of Profit
Allowed
6.
Expatriates SalariesAllowed
Overseas-to-overseas RMB transactions are not regulated by PBOC, but may be subject to the local regulations elsewhere
PAYMENTS INTO THE MAINLAND PAYMENTS FROM THE MAINLAND
Mainland ChinaRMB Area
* Mainland Designated Enterprise (MDE) requirements will remain in force until publication of blacklist names -
Contact local HSBC branches for more information
P.12PUBLIC
5.2 Do I need an RMB account? Where?
Overseas Company
China Company
OPTION 1. NON-
RESIDENT RMB A/C (MAINLAND CHINA)
OPTION 2. OFFSHORE RMB A/C
(HONG KONG)
OPTION 3. OFFSHORE RMB A/C
(OTHER COUNTRIES)
OPTION 4. NO RMB A/C
MAINLAND CHINA HONG KONG OTHER COUNTRIES
OPTION 1:
PBOC approval is required
Regulated interest
Currency exchange not allowed
Cash withdrawal/deposit not allowed
Same-name funds transfer between NRA and overseas a/c is allowed
OPTION 3:
Subject to local regulations and banking infrastructure
No restriction from PBOC
OPTION 2:
Current a/c and saving a/c allowed for both resident and non-resident companies
Interest not regulated
No restrictions for currency exchange
Cash withdrawal / deposit allowed
No restrictions on the transfer of RMB funds between different customers in Hong Kong
OPTION 4:
Subject to local regulations and banking infrastructure
Payment proceeds will be converted to/from the denominated account currency
P.13PUBLIC
5.3 What to do with idle RMB? How?
Offshore RMB Products (Hong Kong)
Following the establishment of the interbank market in 2010, Hong Kong is developing as an offshore RMB
Investment Centre with a wide range of RMB investment products available:
Time deposit, certificate of deposit
Primary and secondary RMB bonds trading
FX linked structured deposit
Interest rate linked structured deposit
Equity linked structured deposit
Gold linked structured deposit
RMB investment funds
Offshore Liquidity Management Solutions
Outside China, RMB is treated as another foreign currency and Global Liquidity Solutions (GLS) suite is
applicable depends on local practices and regulations in respective jurisdictions.
Cash Concentration
Single Currency Notional Pool
Multi-Currency Notional Pool (Interest Optimisation
Facility)
X-border/ X-currency Yield Enhancing (Interest Enhancement Facility)
P.14PUBLIC
Trade and Supply Chain
Trade account (no new a/c needed)
Import and export services, including:
Open account trading
Documentary credits
Documentary collections
Trade finance
DC advising
Internet Trade Services (ITS) via BIB and HSBCnet
Saving / Current accounts
Remittances (TT/RTGS/AutoPay)
Payments / Collections Advising
Cheques
/ Cashier’s Order
Bill Payment
Cheque
Collection Solutions
Time Deposits
Currency Exchanges
Liquidity Management
Online RMB transactions and reporting via BIB, HSBCnet &
HSBC Connect
Payments & Cash Management
As RMB internationalisation
is rapidly evolving, services offered may vary by country or region. Please note that the products and services mentioned above may not be available in all countries or regions and are only available in
jurisdictions where the respective HSBC entities are authorised
to operate.
Unravel the complexities of RMB and make it “just
another currency option”
for your business with our on the
ground expertise and comprehensive suite of onshore and offshore
RMB solutions.
6. HSBC’s RMB Solutions and Global Capabilities
P.15PUBLIC
7. HSBC’s RMB Solutions and Global Capabilities (Cont’d)
RMB Capabilities in Over 50 global markets
New Zealand
JapanSouth Korea
Hong Kong
Vietnam
USA
Brunei
IndonesiaSingaporeMalaysia
Thailand
MauritiusAustralia
UK
Russia
Germany
South Africa
Argentina
Mexico Saudi ArabiaUAE
MacauPhilippines
Brazil
FranceTurkeyItaly
Kazakhstan
Israel
Canada
Poland
Armenia
Czech
Uruguay
BangladeshIndia
Spain
Chile
Paraguay
GeorgiaSlovakia
Greece
PanamaEl Salvador
Bermuda
Switzerland
Ireland
Sri Lanka
Bahamas
Costa Rica
Malta
Luxembourg
Taiwan
Oman
Qatar
KuwaitLebanon
Jersey
Monaco
P.16PUBLIC
8. HSBC’s RMB Milestones
OFFSHORE
First foreign bank to settle cross-border RMB Trade in Hong Kong (& Macau)
First
to issue RMB Bonds and No 1 in offshore RMB bonds: 79 issues (RMB32.9bn), 21.8% market share
First-in-the-market:
HSBC RMB Trade Finance Standard Rate
>280,000 accounts
with RMB capabilities and Pioneer of all new product launch in HK market: Structured deposits, CDs, insurance, HSBC RMB Trade Finance Standard Rate, RMB current account, cheque
services, Cashier’s Order <<2011>>, Demand Draft <<2011>>, autoPay, Business Card <<2011>>, Business Internet Banking and HSBCnet support RMB transactions, etc. Launched first RMB IPO
in Hong Kong as a Joint-Lead Arrangers in Hui
Xian REIT IPO.
HSBC becomes bookrunner
and global coordinator
for Ministry of Finance
RMB offshore bond <Sept 2011>
Best Offshore RMB Bond House
and Dim Sum Bond House by FinanceAsia
and IFR respectively.
Pioneered HSBC Offshore Renminbi
(RMB) Bond Index <2011> HSBC becomes first and only foreign custodian bank
for RMB Qualified Foreign Institutional Investors (Dec 2011)
Lending interbank activity: HSBC publishes daily Interbank Offer Rate
for CNH money market <Jan 2012>
MAINLAND CHINA
One of the first
foreign banks granted as a RMB agency bank.
First International bank to complete transactions in all provinces/cities
in which HSBC has a presence
HSBC becomes first and only foreign custodian bank
for RMB Qualified Foreign Institutional Investors (Dec 2011)
GLOBAL
First
foreign bank to settle cross-border RMB Trade across all 6 continents.
RMB capability in over 50 countries, across all continents.
HSBC Taiwan -
First foreign bank
with license to offer RMB products and services and first foreign bank to complete a RMB cross-border transaction in Taiwan.
First to launch RMB Personal banking in Brunei, New Zealand, Thailand and Mauritius, also available in eight other Asia Pacific Sites (Hong Kong, Macau, Singapore, Japan, Malaysia, Korea, Australia & Philippines).
Over 30 roadshows
and seminars conducted to raise awareness of RMB internationalisation, covering regions including Asia Pacific, Western and Eastern Europe and the US.
HSBC takes key role developing London
as a RMB financial centre.
P.17PUBLIC
Disclaimer
There may be exchange rate risks if you choose to convert RMB into other currencies. RMB is currently not freely convertible and is subject to certain conversion restrictions.
This document is issued by The Hongkong
and Shanghai Banking Corporation Limited (HSBC). The information contained herein is derived from sources we believe to be reliable, but which we have not independently verified. HSBC makes no representation or warranty (express or implied) of any nature nor is any responsibility of any kind accepted with respect to the completeness or accuracy of any information, projection, representation or warranty (expressed or implied) in, or omission from, this document. No liability is
accepted whatsoever for any direct, indirect or consequential loss arising from the use of or reliance on this document or any information contained herein by
the recipient or any third party.
Any examples given are for the purposes of illustration only. The opinions in this document constitute our present judgment, which is subject to change without notice. This document does not constitute an offer or solicitation for, or advice that you should enter into, the purchase or sale of any security, commodity or other investment product or investment agreement, or any other contract, agreement or structure whatsoever and is intended for institutional, professional or sophisticated customers and is not intended for the use of private individual or retail customers. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. Recipients should not rely on this document in making any investment decision and should make their own independent appraisal of and investigations into the information and any investment, product or transaction described in this document. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document. This document, which is
confidential and not for public circulation, must not be copied, transferred or the content disclosed, in whole or in part, to any third party. The document should be read in its entirety.
Copyright. The Hongkong
and Shanghai Banking Corporation Limited 2010. ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Hongkong
and Shanghai Banking Corporation Limited.
All the information set out in this presentation is provided on the best of the Bank's current knowledge and understanding of the relevant law, rules, regulations, directions and guidelines governing or otherwise applicable to RMB trade services but the Bank makes no guarantee, representation or warranty and accepts no liability as to its accuracy or completeness. Please refer to any updates that shall be published or issued by our Bank from time to time including notices that we place at our HSBC branches.