Standard Chartered has announced that the Standard Chartered Renminbi Globalisation Index, or the RGI, ended 2013 on a high note at 1,377 in December, up 5.9% from the previous month and 84.1% year-on-year, driven by rising deposits and cross-border payments.
Expansion of new offshore centres, further policy push and the appreciation of the yuan currency will remain as key drivers for the RGI as we enter 2014. We expect the RGI to increase another 60% to reach 2,200 by year end.
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The rise of RGI re-accelerated in the fourth quarter, triggered by a return of Renminbi appreciation and the liberalisation in cross-border Renminbi lending regulations. Our forecast for another year of more than 2% appreciation for the Renminbi to USD/CNY of 5.92 by end-2014 should bode well for more deposit accumulation this year.
By end-2014, we expect Renminbi deposit in Hong Kong to hit CNY1.15-1.2 trillion, translating into a 34-40% increase, while Taiwan’s could reach at least CNY250 billion.
Continuing prospect of the yuan appreciation and still ample offshore liquidity has lent support to the Dim Sum bond market amid weak market sentiment. January primary issuance hit a monthly record high level of CNY63 billion and we expect strong primary issuance of CNY550-580 billion for 2014.
London widened its lead over Singapore in 2013, in terms of both average daily CNH FX turnover and Renminbi cross-border payments; this offset its lack of Renminbi deposit growth. London London and Singapore now account for 13.4% and 9.7%, respectively, of activity tracked by the RGI, versus 10.6% and 10.7% a year ago. Hong Kong remained the biggest offshore Renminbi centre.
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