Clearstream, a provider of post-trade services for financial services participants and member of the Deutsche Börse Group, today released its latest monthly report in which it details several initiatives that it is working on to support the opening of the Chinese capital markets.
China has been a crucial part of Deutsche Börse’s strategy for a long time now.
Clearstream chairman and member of the Deutsche Börse Executive Board Jeffrey Tessler commented: “China has been a crucial part of Deutsche Börse’s strategy for a long time now, and we have had a strong presence in Asia for many years”.
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He added: “I think it’s clear that we’re currently in the midst of a rare convergence of both internal reform of the onshore Chinese market and international recognition of the importance of the RMB. From a domestic perspective, there’s been a flurry of progress in liberalisation reforms over the last twelve months. This has been mirrored by moves internationally to increase the global role of the RMB.”
Signs of international recognition include the International Monetary Fund’s decision to include the RMB in their Special Drawing Rights reserve currency basket with a weighting of 10.92 percent, the third highest weighting after USD and EUR.
Central banks and other investors are consequently expected to shift parts of their assets to China. This is also partly due to the likelihood that RMB-denominated China A-shares will be included in the MSCI and FTSE benchmark indices. The report also states that Chinese bonds are expected to join some global emerging market indices in the near future.
In addition, Clearstream has said that it is dedicated to exploring options to provide access to onshore RMB products for its customers. The ICSD also is currently in the process of developing a link to the Chinese Interbank Bond Market (CIBM), the third biggest fixed income market in the world with over USD 7 trillion outstanding. The initial stage of this linkage, which is set to go live later this year, will allow eligible international investors to benefit from a simple ICSD method to access sought-after onshore RMB-denominated fixed income assets.