HSBC Asset Management Launches RMB Money Market Fund
HSBC Asset Management has announced the launch of HSBC Global Money Funds – Renminbi (“the Fund”) for Hong Kong investors.
The Fund aims to preserve capital and provide daily liquidity together with an investment return that is comparable to normal money market rate by investing in a diversified portfolio of short-term RMB-denominated instruments.
International usage of the RMB has been on the rise in the last decade, mainly attributable to the positive regulations and policies that connect China’s markets with the rest of the world. Coupled with the inclusion of domestic Chinese equities and bonds into widely tracked indices by major global index providers and the implementation of connectivity schemes, this further drives the global demand for RMB-denominated assets. Among the latest initiatives to integrate onshore markets is a newly announced “Swap Connect” programme that will provide mutual access to Hong Kong and mainland China’s interbank interest rate swap markets.
Against this backdrop, HSBC AM is introducing the Fund, which focuses on managing liquidity, interest rate and credit risks. The Fund will invest in a diverse set of high quality money market instruments from various types of issuers, such as governments, quasi-governments, international organisations, financial institutions (including banks) and corporates, and from a mix of geographies. The Fund also has the flexibility to capture opportunities in both the onshore and offshore RMB universe.
Gordon Rodrigues, Chief Investment Officer, Liquidity, Asia Pacific, who is the manager of the Fund, said: “In the last decade, RMB has come a long way as an international currency for trade, payments, and finance. It is now the world’s third most used currency in trade finance and the fifth most active currency for global payments2. As offshore RMB circulation continues to increase, there is a need for viable alternatives intended for institutions and individuals to manage their RMB liquidity. By using a repeatable investment process that benefits from extensive credit research and focuses on risk management, the Fund aims to help our clients preserve capital1, meet their RMB liquidity needs, and enjoy an investment return comparable to normal money market rate of RMB.
“Hong Kong is the largest clearing hub for global RMB transactions outside of mainland China. As reiterated in its 14th Five Year Plan, the Chinese central government is committed to strengthening Hong Kong’s role as a global offshore RMB business hub. As RMB internationalisation continues to progress forward, we believe the Fund can potentially provide a relatively lower risk and highly diversified option for investors to manage their RMB cash needs,” Rodrigues added.
As of 31 March 2022, HSBC AM manages USD 136 billion in money market assets across 10 currencies globally. The firm has been managing money market strategies for over three decades.