Life of an offshore RMB transaction
The recent announcement of RQFII is similar to the one previously
reported during Vice Premier Li Keqiang's visit in Aug-11. We believe
the initial impact is likely to be muted given the small size. If the scheme
is expanded, the NIM of offshore Rmb deposits is likely to compress due
to competition, but better fund-related fees income would be an offset.
We maintain our overall cautious outlook of the HK banking sector. Our
top pick remains BOCHK.
 RQFII pilot: On 16 Dec 2011, CSRC, PBOC and SAFE together
released the pilot RQFII program, amounting to Rmb20 billion (the
same as previously reported during Vice Premier Li Kaqiang's visit in
Aug-11). The amount represents 3% of offshore Rmb deposits (Rmb619
billion) and 8% of existing QFII AUM (Rmb265 billion). 80% of RQFII
will be fixed income funds, 20% equities. Related note: Hong Kong:
pilot program for RQFII launched, by Lu Jiang, dated 18 Dec 2011.
 Impact to offshore Rmb: RQFII functions as a channel for offshore Rmb
to flow back to China. It increases the investment value of offshore Rmb
and thus should increase demand for offshore Rmb. Given the small
amount allowed for the pilot program, the initial impact should be
immaterial. If the pilot program is expanded later, then the impact to
offshore Rmb is likely to be more meaningful. In the Jul-09 pilot Rmb
trade settlement scheme 400 corporates had limited impact to Rmb trade
settlement. In Jun-10 when the pilot scheme was expanded to 65,000
corporates, the impact to trade settlement became significant.
 Impact to Hong Kong banks: Given the current size of pilot scheme, we
believe the short term impact is likely to be minimal. If the scheme is
expanded, holders of offshore Rmb deposit can opt for RQFII funds.
Banks are likely to broaden their income source from interest income to
fees income. If onshore fixed income yield becomes publicly available to
offshore Rmb depositors, we believe the funding cost of offshore Rmb
deposits will increase and competition will drive net interest margin of
offshore Rmb deposits lower, compensated by better fees income
 What is yet to be announced: In Aug-11, when Vice Premier Li visited
Hong Kong, an ETF scheme was also mentioned. To enhance the Hong
Kong’s function as one of the most important global financial centers, Li
said “The ETF constituted by HK-listed stocks will be launched”. We are
yet to see a further announcement related to ETF.

来　　源：

J.P摩根证券亚洲

撰写时间：

2011-12-19