HSBC Gam remains bullish on renminbi prospects

The group talked up the currency following the recent launch of its Chinese currency bond fund. Several veteran market watchers – including Franklin Templeton’s Mark Mobius – expect the currency to attain global reserve status over the next decade.

HSBC fund manager Hon Yu Fung said the fund launch last October came after necessary improvements in the still nascent renminbi debt market.

“During the initial stages of the CNH market and into the summer of 2011, demand was so high that yields declined significantly and lower-quality issuers were starting to become overly present,” he added.

“Currently, the market is on better footing with yields and quality back.”

HSBC’s approach is to take a conservative duration strategy on the Gif RMB Fixed Income fund, with the team buying one to two-year paper in the belief they can pick up good-quality bonds at decent yields without increasing risk.

Mr Fung said that an initial ramp-up period they are moving closer to the target portfolio, with around 69 per cent in bonds and the rest in term deposits.

Commenting on fears that external events could weigh on the renminbi, Mr Fung said it was one of the few currencies that appreciated against the US dollar in the fourth quarter last year.

“The main factors that continue to make us bullish on the renminbi remain in place,” he added.