Intraday Analysis from FXMarketAlerts.com
Receive FREE Weekly Strategies.Published at 09:07 (GMT) 02 Sep
Total subscriptions of MoF's CNY 5bn dim sum bond reached as much as CNY 20bn, underscoring the overwhelming demand for offshore CNY denominated assets.
Currently, CNY deposit in Hong Kong sit at CNY 572.18bn by Jul 2011, as compared to merely CNY 103.68bn a year ago. The total amount may top CNY 1trn by end 2011 with current speed of expansion. On the other hand, outstanding offshore investable assets denominated in CNY are only a small portion of CNY deposit in Hong Kong. This has created a big discrepancy between supply and demand. However, as the new measures, unveiled by Vice Premier Li Keqiang in a high profile visit to Hong Kong in Aug, kick off gradually, investment choices for offshore CNY are expected to broaden (offering possibly higher yields, especially if it involves onshore assets), which should make it more attractive to foreign investors in the longer-term.
Having said that, CNY internationalization (and hence the CNH market) will occur in a controlled pace. The long-waited mini-QFII program is scheduled for end-2011. HH
Source: http://www.fxstreet.com/technical/market-view/fxmarketalerts/2011-09-02.v07.html
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