D1 banner - Mohammed M'Rabti - Deputy Head of FundsPlace, Euroclear - blog
RMB ETFs open new channel into China’s onshore securities market
I read recently that China has the third largest government bond market in the world. Obviously, this will make it a key focus of attention for international investors searching for yield. In fact, China’s ten-year bonds yield 2.7%, a multiple of the return available in the leading developed markets. They even enjoy a credit rating higher than for most other emergig markets.
The big thing for me is how to access this market. During this year I have had the pleasure of working with a number of China asset managers looking to facilitate access to this market through a new range ETFs which have been launched in Europe. What makes them different? They are all Europe-listed and regulated, but denominated in RMB.
They use the international settlement structure for ETFs, which i worked to establish, as part of Euroclear, in 2013. This makes it possible for issuers to cross-list on multiple exchanges.
The first issue was in March last year when CCBI and Commerzbank teamed up with us to launch the first-ever RMB-denominated Chinese money market ETF in international form. In June this year, Fullgoal Asset Management (HK) launched a range of RMB-denominated ETFs linked to the FTSE China Onshore Bond index and listed them in London and Milan, followed by ICBC Credit Suisse's ICBC CS Wisdom Tree S&P 500 UCITS ETF that went live in July 2017.
These new ETFs give investors a new channel through which to invest in China. It's one that comes with transparency, liquidity and ease of settlement. For me, as an investor, that can only be a good thing.
Mohamed M’Rabti, Director and Deputy Head of Capital Markets, is responsible for Euroclear’s Equity-Linked Asset solutions and FundSettle.
Mr M'Rabti began his career at Euroclear in 2004. Before taking up his current position in 2012, Mr M’Rabti held a number of senior positions within the Euroclear group, including Strategy Issuer Services in the Product Management division. During this time, Mr M’Rabti was highly influential in forging successful partnerships with Capital Precision in the shareholder ID services domain, and with Broadridge in bolstering corporate governance.