Taiwan’s RMB market: Facts and prospects

HONG KONG - Taiwan’s RMB market, also known as the CNT market, has quietly taken off – in terms of the scale of deposits, it has already reached one third of that in Hong Kong. ANZ Bank comments that, as an integrated part of the offshore RMB market, Taiwan has the ability to exert a noticeable influence on the global financial market.

ANZ says the market for Formosa bonds, or RMB-denominated bonds sold in Taiwan, has seen rapid development in recent months, offering an attractive investment option for Taiwan investors. 
If major institutional investors and sovereign wealth managers in Taiwan allocate 5% of their investment portfolios to RMB-denominated assets over the next two years, total demand would be RMB360bn (USD60bn) or 15 times of current outstanding Formosa bonds, ”ANZ says. “Public demand will also promote the market depth and hence attract foreign participation in the Formosa bond market.
Looking forward, the cross-strait economic tie will continue to offer natural advantage for Taiwan’s CNT market.  The current low-yield environment of TWD market and ongoing financial liberalisation in Taiwan will also support demand for Formosa bonds.
“We think Taiwan has a unique position in developing RMB-denominated supply chains, especially the electronic sector. The key for Taiwan to achieve this is to differentiate the CNT market from other offshore RMB markets by exploring its unique position in the global supply chain.”www.live.anz.com (ATI).