China has become a dominant force within the global economy as exports have continued to accelerate over the past 2 decades overtaking Germany as the world’s greatest exporter last year and increasing share on world’s GDP* (Gross Domestic Product). China’s secular economic growth and significant currency reserves support a strengthening of the Renminbi over the next decade, and although the Renminbi is currently one of the most undervalued currencies worldwide in our view, the Chinese government is aiming to establish it as a global currency in the long-term.

 

*Source: Allianz Global Investors 

As the Chinese economy grows, the Renminbi is attracting an ever-increasing share of global economic interest, and already, initial, far-reaching steps have been taken to position Hong Kong as a marketplace for Renminbi bonds and to permit Renminbi transactions by non-domestic investors for the first time. With the establishment of Hong Kong as the key international centre for trade settlement and investment by China, Renminbi deposit accounts have already experienced strong growth since the end of 2010 and are expected to continue to grow to 20% of total deposits in Hong Kong as the offshore currency market develops*.

 

*Source: Allianz Global Investors

The Allianz RCM Renminbi Currency fund provides investors with a direct and cost-effective way to participate in the potential appreciation of the Renminbi currency and invests in bank deposits with the aim of retaining a high level of liquidity. Approximately 50% of the portfolio is currently invested in overnight and one week deposits with the rest in short-dated term deposits for enhancement and deposits are spread around between 10-12 banks with an average credit rating of the portfolio targeting a single A or better.

Senior Portfolio Manager Helen Lam has been working for Allianz Global Investors for 11 years and is based in Hong Kong providing her with direct market access, which is particularly important in the rapidly developing Renminbi market. Helen is manager of the highly successful initial Allianz RCM Renminbi Fixed Income fund (currently closed at its capacity of EUR 450 million) and is responsible for circa EUR 500 assets under management (as at November 2011).