Foreign investors face limitations on hedging and lending against their renminbi holdings at a time when their renminbi holdings are growing and the Chinese currency has depreciated.
Some key issues need clarifying before foreign money will flow into onshore renminbi bonds, say bankers from Credit Suisse, Goldman Sachs and Natixis.
Amid the drama of China's attempts at managed depreciation of the renminbi, other Asian currencies are also expected to slide against the dollar this year – except India's.
In allowing its currency to be subject to so much speculation, Beijing risks investors losing faith in mainland assets, says Julius Baer's Asia head of research.
The Taiwan Stock Exchange is preparing to introduce renminbi-denominated ETFs and stocks, indicating that Beijing will grant an RQFII quota to the island soon.
A proposal by the HKMA that urges asset managers in Hong Kong to move back-office functions to Qianhai is over ambitious and won't work without incentives, say industry figures.