Renminbi (Yuan) Deposits & Investments, worth investing?

[Dennis Ng]

With China overtaking Japan as 2nd largest economy in the world. Renminbi (Yuan) deposits and investments, are they good for investing?

I share my comments with Capital Radio 95.8 FM listeners last week (from 14 Feb to 18 Feb 2011).

If you miss it, here's the recording on xinmsn: http://entertainment.xin.msn.com/en/rad ... id=4436088

[Trade2win]

Note of caution over rush for RMB products



By SIOW LI SEN


(SINGAPORE) Pent-up demand for the Chinese currency has led Singapore investors to pour RMB 4 billion or about S$760 million into RMB products in less than two months. But the investments come with considerable risks because of volatile foreign exchange movements.



Bullish: UOB expects the RMB to appreciate by about 2 per cent versus the USD and SGD over the next 12 months
DBS yesterday said it has garnered RMB 2.7 billion while HSBC said it has attracted RMB 1.3 billion deposits since both banks began selling RMB products in the last two months.

DBS Bank is forecasting that the Singapore dollar (SGD) will gain strongly against the US dollar and also rise faster than the RMB because of the need to contain inflationary pressures.

Philip Wee, DBS Bank senior currency strategist, is expecting the SGD to strengthen against the USD by almost 7 per cent to S$1.18 from S$1.2677 yesterday by the first quarter of 2012.

Mr Wee also forecast that the SGD will gain about 2 per cent over the RMB to S$0.189 from S$0.193 now by Q1 2012, so those who bought RMB with their Singapore dollars could end up losing money.

Inflation rates in China and Singapore were moving together before/after the 2008 global crisis, said Mr Wee.

'In January, Singapore's inflation was higher at 5.5 per cent compared with China's 4.9 per cent. This explains why the CNY/SGD cross rate is stable with a modest depreciation bias,' he said.

According to V Arivazhagan, DBS managing director, regional investment & treasury products, consumer banking investors may wish to consider other currency plays against the RMB for better returns instead of the CNY/SGD cross, which is expected to remain fairly stable.

'Against the US dollar, we think that the ascension of the RMB in the next five years is likely given that the Chinese government is pursuing a move to greater capital account convertibility, a more international currency and a more balanced growth within China,' said Mr Arivazhagan.

United Overseas Bank, which launched its RMB products yesterday, had a bullish view of the RMB against both the USD and SGD. It expects the RMB to appreciate by about 2 per cent versus the USD and SGD over the next 12 months.

'Based on the non-deliverable forwards market expectations, as of now, RMB is expected to appreciate against SGD over the next 12 months,' said Chong Jiun Yeh, UOBAM deputy chief investment officer, fixed income and structured investments.

Investors certainly are betting on China's growth and that it will internationalise its currency, eventually making the RMB a globally traded currency.

'Since DBS introduced the suite of RMB products on its platform, we have received encouraging response from our clients, garnering more than RMB 2.7 billion in volume,' said Mr Arivazhagan.

HSBC has garnered over RMB 1.3 billion in deposits since it launched its RMB savings and time deposit accounts in January 2011, said bank spokeswoman Adele Tan.

Last month, Greg Zeeman, HSBC Singapore head of personal financial services, said the bank 'anticipated pent-up demand for the RMB from customers but still, the response has exceeded our expectations'.

HSBC Global Asset Management also launched a RMB bond fund which has since closed and raised US$460 million.

The bond fund was sold to accredited or sophisticated investors in Singapore and Hong Kong with a minimum subscription of US$65,000.

UOB said yesterday that it will offer two RMB deposit accounts in response to investor demand. In addition, it will launch the United Renminbi Bond Fund to retail investors here by the end of March with minimum investment amounts of S$5,000 or US$5,000.

OCBC Bank will launch its RMB deposits anytime now, said Koh Ching Ching, the bank's head of group corporate communications.

Standard Chartered said RMB products are in the works and will first be offered to its private banking clients and then to retail customers.

[loikm88]

[DBS Bank is forecasting that the Singapore dollar (SGD) will gain strongly against the US dollar and also rise faster than the RMB because of the need to contain inflationary pressures.

Philip Wee, DBS Bank senior currency strategist, is expecting the SGD to strengthen against the USD by almost 7 per cent to S$1.18 from S$1.2677 yesterday by the first quarter of 2012.

Mr Wee also forecast that the SGD will gain about 2 per cent over the RMB to S$0.189 from S$0.193 now by Q1 2012, so those who bought RMB with their Singapore dollars could end up losing money.

][/quote]

==> Bank is selling the product and they are forecasting SGD will gain 2% over RMB and yet they are promoting this investment package agressively to retail investor...contradicting, isn't it?

cheers;

[yhendra]

That's why Tigers/Lions cannot be trusted to teach the lambs.
They tell you one thing, but yet bring you closer to them to give (surrender) your 'life'

[DBS Bank is forecasting that the Singapore dollar (SGD) will gain strongly against the US dollar and also rise faster than the RMB because of the need to contain inflationary pressures.

Philip Wee, DBS Bank senior currency strategist, is expecting the SGD to strengthen against the USD by almost 7 per cent to S$1.18 from S$1.2677 yesterday by the first quarter of 2012.

Mr Wee also forecast that the SGD will gain about 2 per cent over the RMB to S$0.189 from S$0.193 now by Q1 2012, so those who bought RMB with their Singapore dollars could end up losing money.

]

==> Bank is selling the product and they are forecasting SGD will gain 2% over RMB and yet they are promoting this investment package agressively to retail investor...contradicting, isn't it?

cheers;[/quote]