A joint announcement has just been made by Thomson Reuters and Hong Kong Exchanges and Clearing Limited (HKEX) regarding the launch of a suite of indexes today, as per an official statement regarding the co-branded synergy.
The four new indexes under the Thomson Reuters-HKEX Renminbi Currency Index Series include three variants and a primary index based on the CNH – which is China’s offshore currency also known as the renminbi (RMB).
We see great opportunities in fixed income and currency for Hong Kong and HKEX as RMB continues to become more international.
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Four new RMB indexes
The new series of RMB indices from HKEX and Thomson Reuters help measure the intraday performance of the RMB relative to a basket of key currencies, and via the use of a rules-based methodology for indexing.
An excerpt below from the joint-announcement shows the 4 new indices and various related currencies in each basket.
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By measuring the performance of the RMB against a basket of currencies, market participants can gauge intraday movements from a broader perspective, and with the index calculations based on hourly rates from WM/Reuters.
HKEX Chief Executive Charles Li commented in a statement regarding the launch: “This co-branded index series is another important addition to our infrastructure for RMB products. As Chinese capital goes global over the next 30 years and more international equities and commodities are priced in RMB, our RMB indices will become a useful basis for products to help investors manage currency risk.”
“We see great opportunities in fixed income and currency for Hong Kong and HKEX as RMB continues to become more international. We continue to strengthen HKEX’s leadership in introducing RMB products for the offshore market and develop Hong Kong as the global asset pricing centre for China,” he added.
Currency basket structure
The weighting of each currency within the basket is based on volume calculations between the issuing of Mainland China’s currency versus other key currencies, using public data from the Hong Kong Census and Statistics Department and UN Comtrade.
Stephan Flagel, Global Head of Indices at Thomson Reuters, added in a statement: “We are delighted to further strengthen our commitment to the region, to the FX market and robust benchmarking with the launch of our co-branded RMB index series with our longstanding partner HKEX.”
Mr. Flagel further opined regarding the prospects for the RMB currency: “In view of China’s internationalisation and RMB’s increasing presence as a global trading currency, it is a great opportunity for us to partner with HKEX to provide a series of indices that will use global standards to help market participants make better-informed investment decisions and manage risks.
At a time when Chinese currency movements and market volatility are frequently observed, it makes sense for two trusted and independent names to launch these indices to capitalise on the significance of RMB’s internationalisation,” he concluded.
The news follows almost exactly a month after both companies agreed to create the index series as covered in a related post by Finance Magnates.