Share

Sarb to invest in Chinese bonds

Johannesburg - For the first time in the SA Reserve Bank's history a portion of reserves will be invested in the Chinese interbank bond market, Sarb deputy governor Daniel Mminele said on Tuesday.

"South Africa was the first African central bank to be granted an investment quota for the Chinese onshore market," he said in a speech prepared for delivery.

"The Chinese bond market is the world's fifth largest, continues to grow rapidly in both depth and liquidity, and the onshore market provides more favourable yields."

Mminele said an agreement between the bank and the People's Bank of China allowed the Sarb to invest approximately $1.5bn (around R15bn), which was about 3% of South Africa's official gold and foreign exchange reserves.

Mminele was speaking at the Standard Bank fifth African Central Bank Reserves Management Conference in Johannesburg.

He said the Sarb had taken steps to invest in new asset classes and new currencies other than the renminbi - the official currency of the People's Republic of China.

"The bank will be diversifying into currencies such as the Korean Won, Australian Dollar and New Zealand Dollar.

"New asset classes that the bank has begun to invest in include covered bonds and mortgage-backed securities, and we have recently begun trading in bond futures to mitigate the potentially negative impact of rising bond yields on the reserves as well as for more efficient portfolio management," Mminele said.

Investing in these instruments demanded better-skilled staff and more sophisticated information technology and risk systems.

The Sarb had gained a lot of training through external fund managers, including two official sector fund managers -- the Bank of International Settlements and the World Bank.

The bank had been part of the World Bank's Reserves Advisory and Management Programme (Ramp) since 2006.

"Through this engagement bank staff not only received extensive training but are now also in a position to provide training and engage in knowledge transfer with other central banks within the SADC (Southern African Development Community) region.

"Being a member of the Ramp programme has greatly enhanced our efficiency in managing reserves," said Mminele.

The Sarb had made changes to the proportion of funds managed internally and externally and was currently reviewing the custodial arrangements it had in place.

The bank had also embarked on a comprehensive systems renewal project to upgrade its IT and risk management systems.

"We hope to make final decisions for the systems renewal later this year and hopefully be in a position to start implementing whichever system is chosen by the end of the year or early in 2014.

"The decision regarding custodial arrangements we also hope to make early next year," Mminele said.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.08
-0.9%
Rand - Pound
24.03
-0.6%
Rand - Euro
20.57
-0.5%
Rand - Aus dollar
12.38
-0.2%
Rand - Yen
0.13
-0.9%
Platinum
890.97
-0.7%
Palladium
988.99
-1.3%
Gold
2,195.56
+0.0%
Silver
24.43
-0.9%
Brent Crude
86.09
-0.2%
Top 40
67,885
+0.3%
All Share
74,077
+0.2%
Resource 10
56,208
+1.0%
Industrial 25
103,636
+0.4%
Financial 15
16,471
-0.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders