Want to trade the Chinese Yuan on London Stock Exchange? So does everyone else, and it is now possible

Yesterday marked a milestone in exchange-traded currency bonds, the thought of which are usually a reasonably effective cure for insomnia. After several years of unengaging tedium, a tremendous amount of sudden interest was shown by many traders as China’s first-ever foreign-listed sovereign renminbi bond, which was led by HSBC PLC and Bank of China Ltd.’s […]

Trade Chinese Yuan on the London Stock Exchange

Yesterday marked a milestone in exchange-traded currency bonds, the thought of which are usually a reasonably effective cure for insomnia.

After several years of unengaging tedium, a tremendous amount of sudden interest was shown by many traders as China’s first-ever foreign-listed sovereign renminbi bond, which was led by HSBC PLC and Bank of China Ltd.’s U.K. arm, began trading on the London Stock Exchange Wednesday, continuing the country’s recent directive aimed toward opening its capital markets to the world.

The 3 billion yuan ($457 million) bond, which is set to mature in 2019, was originally announced on May 25 this year, which is where the huge demand began to amass before it went live.

Unlike the exciting and liquid FX markets, bond trading has significantly less appeal, however in this case, the issuance of the Chinese Yuan bond was 2.8 times oversubscribed, with 58% of the interest coming from investors in Europe, the Middle East and Africa.

It is perhaps of no surprise that China would make its entry into global markets with its Yuan bond by selecting the London Stock Exchange, as China’s astute president Xi Jinping made a special trip to Britain in October 2015 to further business relations, which at the time was the initial part of establishing London as a Yuan trading center.

Shi Yaobin, Vice Minister of the Chinese Finance Ministry, addressed a Chinese audience yesterday and explained “This is the first ever sovereign RMB bond issued outside China, and also the world’s first local currency sovereign bond issued outside the domestic market.”

Photograph: HengFeng Road, Shanghai, China. Copyright FinanceFeeds

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