Accessing offshore renminbi through synthetics and ETFs

Confronted by the slow pace of China’s liberalisation of cross-border trading, investors are shrugging off regulatory fears and using synthetic structures to meet demand for access to renminbi assets, while exchange-traded fund providers are teaming up with Asian financial institutions to help boost the funds’ liquidity. Vita Millers reports

While the People's Bank of China (PBoC) is slowly easing restrictions on buying and selling the country's renminbi-denominated assets overseas, structurers are finding clever ways to make sure investors can not only hedge against but also benefit from any appreciation in the currency.

One such method is to structure products synthetically so they are not backed by investment in physical assets, with issuers offering derivatives exposure to the underlying asset through a series of swaps instead