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China to press ahead with making yuan global -HSBC CEO

10 Jun 2016, 3:01:32 PM

LONDON, June 8 (Reuters) - Financial turbulence over the past year has made foreign investors pause before pouring money into China but has not harmed the broader process of internationalising the renminbi, HSBC chief executive Stuart Gulliver said on Wednesday.

Gulliver, speaking on the sidelines of a presentation on Beijing's first yuan sovereign bond issue to be listed in London, also said Chinese banks were set to expand aggressively into international markets over the next couple of years.

He said he was as confident of progress in making the yuan an international currency as he was before a sell-off in January that prompted Chinese authorities to raise offshore borrowing costs and crack down on outflows through Hong Kong.

"From those contacts we have in the PBOC (People's Bank of China) and the Ministry of Finance there is no pushback in the process of internationalisation of the RMB (renminbi)," Gulliver said.

But he also said the currency was unlikely to be freely floated any time soon.

"The future of the RMB is not necessarily floating in the way that sterling or the euro does," he said.

"This will be a managed float. Much as a number of countries manage their currencies, as Singapore does for example."

Beijing has launched multiple initiatives over the past year to attract more foreign investors into its mainland markets.

A number of the big Western bond and stock market indexes are considering including onshore government and quasi-government debt, as well as Shanghai-listed shares, potentially bringing in a tide of new inflows.

Asked if major investors had taken a step back from investing in mainland China after a turmoil in Chinese stock markets last August and in the yuan in January, Gulliver said:

"In terms of equities yes, in terms of fixed income no. It is more about an asset allocation decision than fear about China in particular.

"Both offshore and onshore the bond market will expand much faster than equities."

The chief lesson of the past year for the People's Bank of China was to communicate more clearly with markets.

"Part and parcel of (the yuan) becoming a broadly accepted currency is the central bank needs to communicate its actions," he said. "So just as we pore over Janet Yellen and the communications from Mark Carney and so on, I think they have realised they can't just do things and not accompany it with very detailed comments."

He said Chinese banks were "doing a lot" on acquisitions aimed at expanding into international markets where a number of big Western banks have withdrawn.

"Whether they displace the Western banks is hard to predict but I absolutely think they will play a more active role. It is now and over the next couple of years," Gulliver said.

"Think back on the way the yen developed and the role the Japanese banks played in that. In '86 the yen floated freely and that was the point when the Japanese banks became international players.

"You could argue that was not entirely successful ... but we know for a fact the Chinese have studied the Japanese banks quite closely so they should avoid those mistakes." (Editing by Jane Merriman)

由CTgoodjobs.hk撮錄及編輯
資料來源:Reuters

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