Renminbi is not for the opportunistic market, banker

Family offices that are considering adding the renminbi to their portfolio need to see it as a long-term investment, rather than a chance to make a quick buck, according to a banker.

With the ongoing internationalisation of the renminbi, also known as the Chinese yuan, and China’s aim to make it a reserve currency, Geoff Lunt, investment director of Asian fixed income at HSBC, said he thinks a “time will come when everyone will have to have a Chinese bond in their portfolio”.

However, he added that the renminbi should be seen as a “medium to longer-term proposition” of at least two to five years.

“The renminbi theme could play out over the next 20 years,” he told CampdenFO. “It’s not for the opportunistic market.”

The market for renminbi offshore bonds has grown substantially since Chinese authorities lifted certain restrictions in 2010, making it feasible for institutions to issue bonds, although it still remains small in terms of the global bond market.

Overall, it has grown from RMB 29 billion (€3.37 billion) in July 2010 to RMB 201 billion this month, with HSBC expecting it to reach up to RMB 450 billion by the end of 2012.

HSBC has seen strong interest from family offices in its RMB bond funds, particularly Swiss-based offices, as well as private banks, said Lunt.