HSBC Asset Management has launched a fund that invests in a diversified portfolio of short-term renminbi-denominated money market instruments to help Hong Kong investors manage liquidity, interest rate and credit risks.

The HSBC Global Money Funds – Renminbi aims to preserve capital and provide daily liquidity together with an investment return that is comparable to normal money market rate. It has the flexibility to capture opportunities in both the onshore and offshore RMB universe, the firm says.

International usage of the renminbi has been on the rise in the last decade, mainly attributable to positive regulations and policies that connect China’s markets with the rest of the world.

Coupled with the inclusion of domestic Chinese equities and bonds into widely tracked indices by major global index providers and the implementation of connectivity schemes, this further drives the global demand for RMB-denominated assets.

Gordon Rodrigues, chief Investment officer, liquidity, Asia-Pacific, who is the manager of the fund, says: “In the last decade, RMB has come a long way as an international currency for trade, payments, and finance. It is now the world’s third most used currency in trade finance and the fifth most active currency for global payments. As offshore RMB circulation continues to increase, there is a need for viable alternatives intended for institutions and individuals to manage their RMB liquidity.

“Hong Kong is the largest clearing hub for global RMB transactions outside of mainland China. As reiterated in its 14th Five-Year Plan, the Chinese central government is committed to strengthening Hong Kong’s role as a global offshore RMB business hub. As RMB internationalization continues to progress forward, we believe the fund can potentially provide a relatively lower risk and highly diversified option for investors to manage their RMB cash needs.”

HSBC AM manages US$136 billion in money market assets across 10 currencies globally, as of March 31 2022. The firm has been managing money market strategies for over three decades.