Thomson Reuters and Hong Exchanges and Clearing Limited (HKEx) have rolled-out a series of Renminbi (RMB) indices which measure the intraday performance of RMB against mainland China's most important and relevant trading partner currencies. The indices measure the performance of RMB against a basket of key currencies. The primary index measures the performance of CNH against a basket of 14 key currencies.
The index series tracks RMB's effective exchange rate against other major currencies and is designed to be transparent, tradeable and compliant with the International Organisation of Securities Commission's (Iosco) principles for financial benchmark governance and administration.
The new series reflect China's internationalisation and RMB's increasing presence as a global trading currency, and the need to provide market participants with tools to make better-informed investment decisions and manage risks, according to Stephan Flagel, global head of indices at Thomson Reuters.
"Our main focus is going to be the owners of intellectual properties such as ETF sponsors and structured products desks, to bring their ideas to life in the form of an index or in the form of automatically generated portfolios," said Flagel, adding that the continued margin pressure in the financial products world as well as the increasing capability of technology and the increasing availability of data requires a very sophisticated provider to be able to ensure that the data that is used for indices - or the data and technology that is used for providing decision making support to asset managers - is of the highest possible quality.
The primary index measures the performance of the offshore yuan (CNH) against a basket of 14 key currencies, including the US dollar (22.82%), euro (18.93%) and Japanese yen (12.79%). The weight of each currency is determined by calculating the volume of trade between its issuer and mainland China, in accordance with publicly available data from UN Comtrade and the Hong Kong Census and Statistics Department.
All indices are calculated hourly using WM/Reuters rates, a leading foreign exchange (FX) reference for indices and financial contracts worldwide.
"This co-branded index series is another important addition to our infrastructure for RMB products," said Charles Li (pictured), chief executive of HKEx, in a statement. "As Chinese capital goes global over the next 30 years and more international equities and commodities are priced in RMB, our RMB indices will become a useful basis for products to help investors manage currency risk," said Li.
According to Li, the Hong Kong exchange will continue to capitalise on opportunities in fixed income and currency as RMB becomes more international, as well as strengthen HKEX's position as a provider of RMB products for the offshore market and develop Hong Kong as the global asset pricing centre for China.
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