Hong Kong investment funds say there is strong institutional demand for renminbi-denominated bonds in Hong Kong and they are keen to play a part in the nascent market, but strict currency rules are barring them from participating and giving the market the liquidity it needs to grow.
The steady increase of Chinese trade priced in renminbi has raised demand for renminbi capabilities outside of China, so in April 2009 Beijing announced that certain companies – namely retailers, trading companies and certain banks in Hong Kong and a few other regional cities would be allowed to open renminbi business accounts and settle trade in China's currency.
But the looser rules have so far done little to benefit the investment community, with investment funds remaining shut out of the renminbi market. The Hong Kong fund industry is lobbying to be added to the list of companies allowed to participate in the pilot currency scheme.