The fund will concentrate on offshore RMB denominated vehicles such as renminbi deposits and bonds. It is to be managed by the HSBC Hong Kong based division, lead by Cecilia Chan. It is being offered in both wholesale and institutional share categories, with minimum investment levels of $5,000 and $1m USD respectively. HSBC noted that the current RMB market is geared more towards instruments of shorter duration so the average duration is expected to be between one and three years. In relation to the launch, Chan said the fund adopts top down approach with a bottom up fundamental analysis and sset allocation will vary over time as opportunities develop in the market. As many RMB issues are non-rated, they will be subject to a thorough screening procedure by the investment team.
Pointing out her expectations on the prospects of the RMB, Chan said, he renminbi has the potential to be one of the world major reserve currencies in the future. As such, we believe the emergence of the offshore renminbi fixed income market will provide investors with an exciting new investment. Commenting on what this meant for European investors, Andy Clark, head of wholesale for EMEA at HSBC Global Asset Management, said in an article by Citywire he HSBC GIF RMB Fixed Income fund is an early entrant within the Ucits structure. The fund brings the expertise of HSBC vast capability in Asian fixed income to European investors in a straightforward format.
The offshore market in Hong Kong has gotten off to a rapid start since the Chinese government chose to permit qualified financial intermediaries to repatriate offshore RMB into the internal market last August. Many international financial companies have rushed at the chance to offer renminbi products, such as the move by Bank of America Merrill Lynch to launch a Dim Sum Index last week. The index, created to follow the performance of the growing market, covers about half of all outstanding debt denominated in the Chinese renminbi (RMB) market in Hong Kong, according to an article in the International-Advisor. This is viewed by many analysts is an indicator of the rapid development of the renminbi-denominated offshore bond market in the Special Administrative Region. Last February, HSBC Global Asset Management launched the HGIT RMB Bond fund, stationed in the Cayman Islands and targeting mostly Asian clients.
