Despite the broad exodus from emerging market debt, offshore renminbi bonds have attracted flows and are expected to continue to benefit from renewed investor interest.
Having won regulatory approval on Friday, the US asset manager will be the first to list a dim-sum bond ETF in Hong Kong.
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.
The firm is looking to pair offshore bonds with onshore securities with a view to giving Hong Kong pension savers access to the asset class, when regulations permit.
Boasting a broader array of issuers based on credit fundamentals not just FX appreciation, the $25 billion offshore RMB bond market is catching the eye of insurers, among others.
Early use of offshore RMB-denominated bonds and other local securities as collateral for cross-border repurchase agreements holds promise that Asia’s repo market will develop.