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Strengthening RMB markets with sophisticated products

Efforts to create access to onshore capital markets will prove fruitless without strong product offerings

January 13, 2016 | Sam Ahmed

The access to onshore RMB markets has been of utmost importance to policy makers in Beijing. While the capital account remains closed, a host of initiatives such as the Shanghai-Hong Kong Stock Connect, the Shanghai Free Trade Zone as well as qualified investor programmes have all been designed to provide limited access for foreign investors. Despite these initiatives, innovative means of access alone is not sufficient to prompt foreign investors into China. Of equal relevance is the creation of credible and sophisticated RMB products and services that are supported by deep and liquid markets, and a transparent regulatory regime.

While China does have large pools of surplus capital to execute grand plans for infrastructure build, it lacks the experience and the expertise of understanding complex financial products such as derivatives, and therefore strategic partnerships over organic development is the wiser approach.

China Europe International Exchange
On October 29th 2015, Shanghai Stock Exchange (SSE), Deutsche Börse Group and China Financial Futures Exchange (CFFEX) officially announced their joint venture, China Europe International Exchange (CEINEX). The media has made comparisons of this latest initiative with the Shanghai-Hong Kong Stock Connect but the crucial differentiator with CEINEX is that the products will focus more on capital market instruments such as bonds, ETF’s and, eventually, derivatives using RMB underlings.

The first ETF has already been launched from CEINEX meaning that for the first time a complex RMB product is directly available in Europe. Han Chen, co-CEO of CEINEX, in a statement released by Bank of China stated “The launch of the ETF creates a conduit for investors to access China’s stock market and further expand RMB investment channels. As the gateway between Europe and China, CEINEX will focus on ETFs, bonds and gradually broaden its RMB financial derivatives offerings to meet...

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China, Markets & Exchanges, Rmb, Trade Finance, Transaction Banking

Keywords:China, RMB, , Shanghai Free Trade Zone, Hong Kong-Shanghai Connect, Sentot Sentausa, Shanghai Stock Exchange, Deutsche Börse, CFFEX, CEINEX, Deutsche Bundesbank, Seagate, Emerson Radio, CSRC, CBRC, CIRC,