subject: The Birth Of Investments In RMB... Courtesy Of McDonald's [print this page] Did anyone see what McDonald's (MCD) just did? Besides delivering breakfast and lunch daily to the coworkers in your office, they just took the first step in shaping investments for the future. Investments in RMB!
If you missed it, it's because it was mostly symbolic. McDonald's (MCD) became the first international non-financial firm to issue Bonds denominated in RMB. The issue was for $30,000,000 in 3 year bonds, about CYN 200,000,000.
The bonds will pay 3% per year for a three year period, which they probably could have issued for less in the US. International Business Machines Corp. (IBM) recently issued 3 year notes in the US for 1%.
Not everyone welcomed the news. For Wall Street, they got a glimpse of where the world will seek capital in the future. It also indicates that the US dollar will have more competition and might see demand wane for its currency in the future.
As the RMB takes its place on the global stage, Expats and investors in China should welcome this first step. This sets the stage for Bonds and Stocks to be directly issued in RMB denominated instruments. As the RMB becomes a more freely traded and widely used currency, access to direct stock and bond funds in RMB will be a welcome change for savers who want direct exposure to RMB.
At Elite Investment Group, a major objective of many of our international clients is currency hedging. Currently we use foreign stocks, hard assets, and currency hedging funds to achieve that objective. However, currency hedging can sometimes lag by a few quarters as the currency increases or decreases work their way through corporate balance sheets and out into earnings.
