The yuan, or renminbi (CNY or RMB), as we have seen in the previous interventions, plays no role as a global reserve currency, but is rapidly gaining a position as a currency used in international trade. The assumptions that make the renminbi the candidate currency for a role of great importance on international markets, in the near future, are China's growing influence worldwide and the growth prospects of its economy. There are still many obstacles to overcome on the path towards the liberalization of the yuan, first of all the problem of the incomplete convertibility of this currency. However, in a world where the major reference currencies, the dollar and the euro, reflect the continuing difficulties that the United States and the European Union are facing, the yuan is increasingly appearing as a choice that, especially in the future, will offer profit potential not indifferent.
The beating heart of the renminbi globalization strategy is found in Hong Kong: the possibility for foreign companies, granted in August 2010, to issue bonds denominated in renminbi in order to self-finance their local investments, listed on the Hong Kong Stock Exchange (so-called dim sum bonds), has contributed significantly to the extraordinary growth of the offshore renminb market. In fact, this currency has since been quoted and exchanged against the US dollar as CNH (off-shore CNY). Similarly, Chinese currency-denominated checking and deposit accounts also observed a notable increase in Hong Kong.
The reasons that make the renminbi so attractive to foreign investors are not limited to the fact that, related to China's growth, it will become increasingly important as a currency in international trade, also following its liberalization. The yuan also has great appreciation potential (it is estimated that it is undervalued by more than 40% and that the currency appreciates by around 4% annually) and is characterized by lower volatility than its major rivals.
These opportunities have given rise to the creation of an increasing number of funds that invest directly in the Chinese currency; among the main names are: HSBC, Barclays, BNP Paribas, Allianz Global Investor, Amundi, AllianceBernstein and Azimut. These are funds that support foreign entrepreneurs by allowing them access to instruments denominated in renminbi in the offshore market, in particular dim sum bonds and deposits in Chinese currency. These investment funds may be particularly interesting for Italy which, the third trading partner of the Asian power among the EU Member States, has over 2.500 companies present in China.
In this regard, HSBC Global Asset Management has launched the HSBC GIF RMB FixedIncome sub-fund also in Italy, i.e. a UCITS fund that allows entrepreneurs to access various services and instruments denominated in CNH, including: dim sum bonds, savings accounts, checking accounts, credit cards, time deposits, foreign exchange services, renminbi ATM withdrawals and non-deliverable forward (NDF) contracts denominated in renminbi. The structure of this fund provides for the asset allocation to change over time, both on the basis of the regulatory context and in line with market developments (since the latter is especially characterized by short-term instruments, the underlying investments of the fund will have a between one and three years). This is a fund that mainly caters to two classes of customers, retail and institutional, for which there are separate minimum entry fees, one thousand and one million euro respectively.
Another new and interesting offer in this context comes from Azimut: the Renminbi Opportunities fund was launched in June 2011, which is aimed at European entrepreneurs and institutional investors (with a minimum investment threshold of 250 thousand euros). The investments that the group manages, initially made in euros, are first converted into dollars (and covered by means of forward sales) and subsequently into yuan. The fund, harmonized UCITS III, provides for unlimited daily liquidity and distributes its investments mainly between bank deposits denominated in renminbi (diversified among at least five distinct banks operating in the Hong Kong market). Another good percentage of the underlying investments are represented by dim sum bonds Finally, in a smaller proportion there are government and corporate bonds, generally of short financial duration (1-2 years). In addition to this diversification of the assets subject to investment, which therefore grant a contained risk profile, consultancy services are offered to companies operating locally.
Alongside this investment fund, Azimut has developed a second, with similar characteristics, the AZ Fund 1 Renminbi Opportunities, launched in September of the same year, intended for retail customers and which provides for a minimum investment threshold of 1.500 euros, a figure which, unlike the first fund, does not preclude investment opportunities for SMEs and small savers.
