Australia and Hong Kong get closer on renminbi business – FX firms to benefit?

Australia has long been heralded as an ideal location from which FX brokers can conduct business with the Asia-Pacific region, with a number of prominent FX firms having forged a well-established relationship with retail traders in a number of Asian nations.

The Antipodean nation’s proximity to China, Hong Kong, Singapore and Malaysia, some of the most important markets for retail FX today, combined with a stable economy and high-quality banking and regulatory structure has stood it in good stead within a much coveted region.

On Thursday last week, the Hong Kong Monetary Authority strengthened this further by holding the Second Hong Kong – Australia Renminbi Trade and Investment Dialogue (Dialogue), facilitated by the Hong Kong Monetary Authority (HKMA), Australian Treasury, and the Reserve Bank of Australia (RBA), was held in Hong Kong.

The Dialogue was attended by over 130 representatives from corporate and financial institutions, and discussions focused on how corporate entities, financial institutions, and investors can take advantage of the latest policy developments to strengthen renminbi (RMB) trade and investment links with China, as well as to make use of offshore RMB capital markets to meet their funding and investment needs. The Dialogue was opened by Mr Norman Chan, Chief Executive of the HKMA, and Dr Martin Parkinson, Secretary to the Australian Treasury. This was followed by presentations from representatives of the People’s Bank of China and the Australian National University, and two panel discussions comprising experts from the Hong Kong, Australian and Chinese financial and business communities. The panel discussions were facilitated by Dr Philip Lowe, Deputy Governor of the RBA and Mr Eddie Yue, Deputy Chief Executive of the HKMA.

A group of senior representatives from the Hong Kong and Australian offices of ANZ, Bank of China, Commonwealth Bank of Australia, HSBC, ICBC, JP Morgan, National Australia Bank, Standard Chartered Bank and Westpac are meeting this afternoon to review developments in RMB business since the first Dialogue and to consider ways to strengthen RMB products and services, with a view to facilitating greater participation of corporates and other customers in the RMB market.

Since the first Dialogue in Sydney last year, international use of the RMB has continued to gain momentum. The use of RMB by corporates in cross-border trade and investment transactions has increased, while RMB financial activities in the offshore markets have also grown. In Australia, 63% of respondents to a recent survey indicated that they expect to increase their RMB use in the future1. Meanwhile, RMB activities have continued to expand in Hong Kong, with the average daily turnover of the RMB RTGS system increasing markedly to some RMB700 billion in March 2014.
The Dialogue is a private sector-led initiative which aims to provide a platform to foster closer collaboration between Hong Kong and Australia on RMB trade settlement and investment, the development of RMB-denominated banking products and closer RMB banking and financial links.

Whilst this particular dialog focused on the banking sector and the ability to conduct business within Australia in renminbi, the very matter that this discussion was held demonstrates Hong Kong and Australia’s commercial compatibility, which can only be good for the FX industry.

Read Also: