BANK of China (BOC) launched two initiatives yesterday aimed at boosting foreign investors’ use of the renminbi (RMB) and grabbing a bigger chunk of a burgeoning offshore market in the currency in London.

    The RMB Bond Trading Index, launched simultaneously in London, Shanghai and Singapore, is another attempt at increasing foreign holdings in the world’s third-largest bond market.

    Those were estimated last year at just under 2 percent of a market valued at 33 trillion yuan (US$5.2 trillion), largely a reflection of difficulties foreign investors face when trying to buy yuan-denominated bonds.

    While China has pushed ahead with measures to allow foreign institutions to buy its stocks and commodities more freely, bonds are still restricted to the QFII and RQFII programs that allow big institutional investors to invest large amounts at considerable cost and with hefty delays.

    As big a barrier is foreign investors’ lack of confidence in their knowledge of Chinese assets. Creating a bond index — a tried and tested way of creating a benchmark that filters asset quality — is one step toward resolving that problem.

    “We hope the index will serve as a guide for overseas institutional investors,” Bank of China chairman Tian Guoli said at the launch yesterday.

    The index will be run by Bank of China’s Shanghai RMB Trading Unit with pricing available on both Bloomberg and Thomson Reuters EIKON terminals. (SD-Agencies)