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Finance Seminar Presentation 1
Transcript of Finance Seminar Presentation 1
bonds of the U.S and the Dim Sum Bond for
$970 and ¥ 6,120.70.
Both of these bonds mature in 1 year and
their face values are $1,000 and ¥ 6,310.
(Current exchange Rate: $1 = ¥ 6.31) For Example...(continued) In this case, (when held to maturity)
YTM = HPR = 3.09%
However, if ¥ appreciated....
(New Exchange Rate: $1 = ¥ 5.99)
New HPR from Dim Sum Bond would be...
YTM = HPR = 8.52%
from a US investor's perspective, More about Dim Sum... Hit the market in 2010
Many Hedge-fund Investors Price started falling in the 2nd half of 2011
Flight to Quality (Accounting standards)
Global Financial Turmoil Current Trend Less aggressive investment from Hedge-funds
Increased investment amount from other institutional investors
Private banks, Commercial banks, Mutual funds, and Insurance Companies Growth in Size of the market Investor Diversification
(Types & Geographies) October of 2010: $1.46 Billion issued during the year 2011: ¥185 Billion ($29.4 Billion) 2012: Expected to reach ¥240 Billion Growing Investment opportunities for Individuals Mutual Funds
Exchange Traded Funds (ETF) on NYSE
Guggenheim Yuan Bond (RMB)
PowerShares Chinese Dim Sum Bond Portfolio (DSUM)
Market Vectors Renminbi Bond ETF (CHLC) Increasing number of sub-investment grade quality bonds
Quality of Borrowers (No Credit rating)
Lax accounting standards
Lack of high-quality information about issuers Potential Problems Questions Other International Bond Makets Name Issuer Country Issued In Arirang Bond Kimchi Bond Dim Sum Bond Panda Bond Yankee Bond Samurai Bond BullDog Bond Kangaroo Bond Kiwi Bond Formosa Bond Foreign Institution Korea Korea Hong Kong China USA Japan UK Austrailia New Zealand Taiwan Curreny Denominated In Won Foreign Currency Yuan Yuan US Dollar
Pound Austrailian Dollar New Zealand Dollars non-New Taiwan Dollar Is strong Yuan appreciation a good thing to China's Economy? What do you think is the trend of the Dim Sum market? Stronger or Weaker? Do you agree with the Yuan will continue to appreciate versus the dollar? Why? What is gotta happen if more and more investors turnto Dim Sum Market?
Will it be collapsed someday in the future? It is said that most of the dim sum bonds weren't rated.
What factors of those bonds attract investors to buy them? Do you think yuan bonds are superior to US bonds? Thank You! Any Other Questions? Yuan appreciated 4.72% during 2011
Yuan appreciated 7.53% during Sep. 2010 ~ end of 2011
Exchage rate vs. US dollars reached 6.30 for the first time since 18 years ago