Ye Tan: "Buy Money" For RMB Internationalization

Hongkong is the de facto Renminbi offshore.

This is a normal phenomenon. Otherwise, Hongkong will not become an offshore center for RMB.

There is no need for the Hongkong monetary authority to explain that the relevant departments in the mainland need not be nervous either.

What is important now is that the two sides work closely together.

RMB deposits in Hongkong increased significantly around October 2010, indicating that the market will tend to be consistent with the market after October.

But with the rise of the US dollar index, the rate of conversion to RMB in November should be reduced.

We have opened the gate of internationalization of RMB, and we must have a comprehensive response strategy. Where does the capital flow lead to the bond market or shareholders, or the real estate market?

According to Chen Delin, President of the Hongkong monetary authority, there are three components of the renminbi in Hongkong: one is residents' RMB deposits, the other about 60000000000 deposits are mainly from Hongkong residents' deposits at the end of 2009, and by the end of October 2010, the RMB deposits of residents increased by 52 billion 700 million yuan.

The RMB accounts for individual residents increased from 1 million 300 thousand at the end of 2009 to 2 million 120 thousand in November 2010, while two were domestic and foreign enterprises.

"From 7 to November, the overall expansion of the RMB cross-border trade pilot led to a substantial increase in the volume of opening up of Hongkong enterprises". About 100 billion yuan of deposits increased by 150 billion in Hongkong in 2010.

By the end of 2009, only 700 million yuan of Renminbi deposits was made by enterprises.

In July, the mainland RMB cross-border trade payment pilot expanded to more than 20 provinces and cities, and expanded to the outside world. In July, the RMB accounts of Hongkong enterprises increased from 17 thousand in June to more than 60 thousand, but by the end of October, it had increased to 110 thousand.

These two parts have more than 200 billion yuan.

The above funds are in the controllable range. What really worries people is hot money.

It has been reported that 640 billion Hong Kong dollar "hot money" has been stranded in Hongkong and opportunistic investment into the mainland.

The hot money of HK $640 billion is not much, and it is much less. In fact, it is unclear how much money is going through underground channels.

It is true that hedge funds move eastward to Asia in Hongkong, and the fact that RMB bonds are sought after is also true.

At this point, it is necessary to do two things: first, curb the hot money and prevent the short-term arbitrage of foreign exchange from flooding; two, continue to issue RMB bonds, and at the same time, divert the funds to the mainland stock market and bond market by means of small Q F I I and so on, so as to serve the real economy.

At present, 4 banks in Hongkong have been approved to enter the Shanghai interbank bond market, and more banks are still applying. Yao Gang, vice chairman of the securities and Futures Commission, revealed that as of the end of October 2010, the securities and Futures Commission has approved 10 brokerages, 18 funds and 6 Futures Company to set up overseas institutions.

It is not necessary to deny that there is hot money in Hongkong. There is no need to deny that there is arbitrage space in the internationalization of RMB. Now, when the internationalization of RMB has just opened, it will be a taboo of RMB internationalization if we do not recognize the market liquidity.

According to the rule of the exchange rate reform, the RMB will appreciate in the future from 3% to 5% per year, which means that the hot money will increase in the future. But because of the decline in trade, the actual foreign exchange may not be high.

In the process of gradual appreciation of the RMB exchange rate, the speed of RMB internationalization will be greatly accelerated, and the status of Hongkong becoming an offshore center of RMB will become more and more stable.

In addition to the RMB bond products, the products linked to the gold will also be launched in the near future. This means that the RMB has the yield curve of the international market, and the renminbi has the anchor of gold.

With the internationalization of RMB and the spread of global banknotes, gold is the only center that allows the renminbi not to be swept away by strong winds.

All those who are optimistic about the future of the renminbi will hold the renminbi, and the capital account can hardly be redeemed. All the powerful Minded Financial people will be involved in the risk free arbitrage of RMB, from international to domestic.

In Hongkong, the arbitrage will become the norm.

Maybe this is the price of RMB internationalization. Maybe this is a rare carnival season for most of China's overseas funds.