DBS RMB Index for Winning Enterprises falls to 57.2 in the fourth quarter of 2014 | 繁體

Despite a drop in business needs for RMB, companies are showing interest across a broader range of RMB products

Sparks for 2015 - RMB is expected to surpass yen and rank fourth for global payments, while policy initiatives continue to drive RMB personal investment

Companies are showing interest in a wider variety of RMB products
Despite the drop in business needs for RMB, companies are showing interest across a broader range of RMB products. In 4Q 2014, the percentage of companies that said they are currently using or will consider using RMB payment and receivables services in the next 12 months increased to 28%, up from 20% in the previous quarter. Some 10% of companies said they are currently using or will consider using RMB trade services in the next 12 months, versus only 4% in 3Q 2014.

Interest is growing across a broader range of RMB products, including term loans and letters of credit. Companies using trade services showed an increasing need for RMB services, such as deposits, payment and receivables, and trade services, in their operations. This is consistent with the increasing use of RMB for global payments.

Of the companies that were using trade services, some 56% have either used RMB payment and receivables or would consider using them for these purposes in the next 12 months, compared with 41% in 3Q 2014. Some 42% have either used RMB trade services or would consider using them for these purposes in the next 12 months, up from 13% in the previous quarter.

Tommy Ong, Executive Director, Treasury and Markets (Greater China), DBS Bank (Hong Kong) Limited, said: “The use of RMB products is expected to increase going forward as corporates adopt various hedging strategies to mitigate increasing exchange rate volatility. Also, more small and medium-sized enterprises tend to invoice in RMB because they may not have the experience or expertise to hedge foreign exchange risks effectively.”

RMB to surpass the yen and rank fourth for global payments by end 2015
More companies are using RMB trade settlement accounts. Some 27% of companies said they used RMB trade settlement accounts in 4Q 2014, versus an average of 19.8% in 4Q 2013-3Q 2014. A record high 14% of companies said they were using RMB export trade settlement accounts, compared with an average of 7.5% in 4Q 2013-3Q 2014. Those who used import trade settlement accounts also slightly increased to 13%, from an average of 12.3% in 4Q 2013-3Q 2014. In 4Q 2014, 15% of companies said customer acceptance of RMB for trade settlement increased, while 73% said there was no change, and only 12% said acceptance decreased.

These findings are consistent with the latest report issued by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). According to SWIFT, the RMB overtook the Canadian dollar as the fifth most-used currency for global payments in December 2014. The proportion of transactions denominated in RMB climbed to a record 2.2%, after hovering around 1.5% over the past year. The US dollar, euro, pound, and yen remained the four most-used currencies with respective shares of 44.6%, 28.3%, 7.9%, and 2.7%.

Nathan Chow, Vice President and Economist, Group Research, DBS Bank (Hong Kong) Limited, said “China is the world’s largest trading country, and 25% of its foreign trade is now settled in RMB, which is not too far from the 30%–40% level for the yen for Japanese trade. Amid ongoing liberalisation efforts, more RMB capital will flow abroad and the number of transactions will increase, meaning spreads should narrow and the cost of trade should fall. That will further incentivise market participants to trade in RMB. We expect the RMB to surpass the yen and rank fourth for global payments by end 2015.”

Policy initiatives continue to spark RMB personal investment in 2015
The DBS RMB Index for VVinning Enterprises (DRIVE) largely reflects the level of corporate usage and acceptance of RMB, which fell in 4Q 2014. Yet, the survey found an increase in the personal use of RMB following the removal of the RMB 20,000 daily conversion limit in November 2014. Specifically, 47% of the business decision makers said that they would consider increasing their personal investment in RMB products after the lifting of the cap. Some 69% said they would increase their investments by more than 10%.

In addition to the Shanghai-Hong Kong Stock Connect, China is seeking to provide domestic residents with more investment channels. According to the People’s Bank of China, China’s citizens will be able to buy overseas equities and real estate. Talks are underway to give locals access to RMB capital markets in Singapore and London via an RQDII scheme. Offshore RMB liquidity can be further boosted through such policy initiatives. This is important against the backdrop of more balanced cross-border RMB flows. 

DBS RMB Index for VVinning Enterprises (DRIVE) offers a strategic tool for policy-makers, businesses and investors to track the actual usage and acceptance of RMB among Hong Kong companies as well as their sentiment towards future RMB adoption. DBS releases the findings of DRIVE on a quarterly basis. Fieldwork for the 4Q 2014 survey was conducted through telephone interviews with the business owners and decision makers of over 200 companies in Hong Kong.Attachments:

1. DBS RMB Index for VVinning Enterprises (DRIVE) 4Q 2014 presentation deck
2. DBS RMB Index for VVinning Enterprises (DRIVE) 4Q 2014 research report

Photo Captions

Photo 1: Tommy Ong, Executive Director, Treasury and Markets (Greater China), DBS Bank (Hong Kong) Limited, expects the use of RMB products to increase as corporates adopt various hedging strategies to mitigate increasing exchange rate volatility.

Photo 2: Nathan Chow, Vice President and Economist, Group Research, DBS Bank (Hong Kong) Limited, said the RMB would surpass the yen and rank fourth for global payments by end 2015.

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