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China to establish renminbi clearing in Brazil – Industry roundup: 9 February

China to set up renminbi clearing arrangements in Brazil

China’s central bank announced that it has signed a memorandum of understanding (MoU) on setting up renminbi (RMB) clearing arrangements in Brazil, in a move to help boost the currency’s global status and further challenge the dominance of the US dollar.

The People’s Bank of China s(PBOC) said that the establishment of such arrangements for the RMB would be beneficial to cross-border transactions, and further promote bilateral trade and investment facilitation.

In recent months China has signed similar RMB clearing deals with Pakistan, Kazakhstan and Laos.

Two-way trade between China and Brazil reached US$172 billion in 2022, according to data from Chinese customs. Brazil is China’s largest trade partner in Latin America where bilateral trade volume have exceeded US$100 billion four years in succession. China has served as Brazil’s biggest trade partner for 13 consecutive years.

China has attempted to boost its currency globally since 2009 to reduce reliance on the US dollar in trade and investment settlements and challenge the greenback’s role as the world’s major reserve currency.

HSBC steps up support for Hong Kong e-commerce merchants

HSBC has launched HSBC Merchant Box, a new one-stop digital payment solution for small-and medium enterprises (SMEs) in Hong Kong. The bank said that the new solution simplifies international payments across regional and global e-commerce platforms for SMEs and makes it possible to ‘receive like a local’ at real-time exchange rates.

HSBC Merchant Box “builds on the Bank’s extensive global payment network and strong digital infrastructure to help SMEs capture local and international digital sales.” HSBC added that the return of quarantine-free travel between Hong Kong and mainland China and closer economic integration in the Greater Bay Area (GBA) “will combine to support merchandise trade growth.”

HSBC Merchant Box is now available for selected HSBC commercial customers through business internet banking, and will be extended to all customers in Hong Kong in the coming months.

Frank Fang, General Manager, Head of Commercial Banking, Hong Kong and Macau, HSBC said: “Cross-border eCommerce has emerged as a driving force of mainland China’s external trade, recording year-on-year growth of nearly 12% in export value in 2022. As a regional trade hub in the GBA and a gateway to global markets, Hong Kong is well placed to capitalise on the huge market potential.”

HSBC Merchant Box will enable customers to activate HSBC Global Wallet to collect payments in Australian dollars (AUD), Canadian dollars (CAD), euros (EUR), pounds (GBP), Singapore dollars (SGD) and US dollars (USD) within minutes. They can choose to hold the funds in HSBC Global Wallet or transfer to their business integrated accounts anytime. Payers can send money easily to HSBC Merchant Box users using local addressable information.

Deutsche Bank's asset management arm explores stake in two crypto firms

Deutsche Bank’s asset management arm is in talks to invest in two German cryptocurrency firms as part of the bank’s efforts to revive growth, according to a Bloomberg report.

Citing people familiar with the matter it said that DWS Group, led by Chief Executive Officer Stefan Hoops, has held several discussions focused on acquiring a minority stake in Deutsche Digital Assets, (DDA) a Frankfurt-based provider of crypto exchange-traded products.

Tradias, a market-making firm owned by Bankhaus Scheich, is named as another potential target for investment. In late 2021, Frankfurt prosecutors selected Tradias to sell confiscated cryptocurrency in a way that minimised volatility. As with DDA, discussions to invest in Tradias centre on purchasing a minority stake.

Bloomberg says that the bank’s pivot to crypto comes as Hoops is attempting to rehabilitate DWS’s reputation after allegations of greenwashing resulted in probes by US and German authorities. “It's an interesting approach to take since the crypto ecosystem has been rocked by its own scandals and doesn’t exactly have a sterling reputation with global regulators,” the report notes.

In December, Hoops outlined the bank’s strategy for blockchain and digital currencies, which included a plan to “build-or-buy various specific blockchain-related services” as a way to “lay the foundation for a digital future.”

During an  earnings call last week, Hoops said that DWS has “started to assess strategic partners and commence due diligence on potential targets” in areas where it wants to develop new capabilities, such as digital assets. According to Hopps, the recent drop in digital asset prices could yield “interesting opportunities” for DWS.

Interest in blockchain technology and how it can be integrated into traditional finance has grown among institutional investors in recent months as more major names have got involved with the technology.

Bitcoin outperformed by AI-focused cryptocurrencies

The most widely known cryptocurrencies such as Bitcoin and Ether have shown signs of revival since the start of the year, reclaiming some of the ground lost during 2022. However prominent traders on Crypto Twitter are heralding artificial intelligence (AI)-based tokens as the sector that might lead the next bull market cycle, reports the CoinDesk website.

It reports that over recent weeks the biggest gainers have been tokens for platforms such as Alethea's artificial liquid intelligence (ALI), (FET) and SingularityNET (AGIX), which have surged as much as 220%. The tokens of AI-based upstarts like Image Generation AI (IMGNAI) have more than tripled over a two-week period. The protocol allows users to generate artwork using text disruptions on social platforms such as Discord.

One-time popular tokens from 2018 and 2021, such as Big Data Protocol (BDP) and Measurable Data (MDT), have taken the opportunity to issue  tweets to remind investors of how they utilise AI technology within their blockchain applications – and have been rewarded with major gains. Both protocols use their tokens to commoditise data, allowing providers and buyers to exchange data securely and anonymously.

CoinDesk reports that much of the recent surge in AI tokens emerged after the public launch of chatbot ChatGPT and image generation software Dall-E in mid-2022. Both are traditional software that do not use cryptocurrencies or blockchain and were launched by OpenAI, which recently raised US$10 billion from Microsoft at a US$29 billion valuation.

Such institutional interest has helped create a compelling argument for crypto traders to bet on AI-focused tokens as the next growth sector.

“The growth opportunity around the AI and Web3 space combines early interest, potential and hype,” states Ravindra Kumar, founder of crypto wallet Frontier. “While it's true that there may be some hype surrounding AI intervention in the crypto space, we are seeing the emergence of innovative and compelling use cases.”

China partners with Russia to develop Arctic titanium deposit 

One of China’s biggest construction and engineering companies has agreed to help develop Russia’s largest titanium deposit located in the Russian Arctic. Expansion of an Arctic deepwater port and a new railroad to the port are part of the development plans.

Russian Titanium Resources (Rustitan) and China Communications and Construction Company (CCCC) signed the agreement for the development of the project in the Komi Republic.

The cooperation extends beyond titanium mining and includes a host of related infrastructure development including expansion of the Arctic deep water port of Indiga and construction of the Sosnogorsk-Indiga railway connection. The region’s mining cluster extends beyond titanium into other minerals, including zircon, iron ore, and gold.

Central to the project is the transport component allowing for the export of materials through Urals and Siberia and funnelling cargo onto the Northern Sea Route (NSR).

Rustitan was founded in 2007 focusing primarily on the mining of titanium and quartz raw materials. The company discovered the Pizhemskoye deposit, located in the Ust-Tsilemsky district of the Komi Republic, in 2021. The field is home to Russia’s and the world’s largest titanium ore reserves. Pizhemskoye contains more than 80% of the country’s titanium ore reserves.

CCCC has been involved in several of China’s Belt and Road Initiative (BI) projects, though it has repeatedly faced scrutiny for its financial practices and has been subject to US sanctions for more than a decade.

China is the world’s largest producer and exporter of titanium and also one of the leading importers of titanium ore required to produce the alloy. Lightweight titanium alloys are used extensively in the aerospace and defence industry during the production of jet engines, missiles and spacecraft.

Prior to western sanctions Russia’s largest producer VSMPO-Avisma supplied around 30% of titanium needs for the global aerospace industry, with Boeing receiving 40% of its titanium from Russia and European rival Airbus procuring up to 60% from Russia.

Nokia unveils sustainable finance framework

Finnish telecommunications multinational Nokia has announced its sustainable finance framework (SFF), which it claims places sustainability as core to future stakeholder value and central to its business outcomes. The framework “reinforces Nokia’s commitment to sustainable growth by ensuring its financing strategy supports the company’s recently enhanced environmental, social and governance (ESG) strategy.

The corporate ESG strategy, which “emphasises that purpose and profit go hand in hand”, is built around five pillars where the company can have a significant material impact. Nokia believes linking the ESG strategy to the SFF allows it to embed sustainability throughout the organisation while creating long-term value for stakeholders, both internal and external.

Nokia says that it understands its responsibility to decouple the continuous growth in data traffic from equivalent growth in energy consumption and to reduce greenhouse gas (GHG) emissions across the value chain, from its own operations to thensupply chain and customers. Among Nokia’s central ESG objectives is its commitment to reduce its GHG emissions by 50% between 2019 and 2030 across its value chain.

The target has been accepted by the Science Based Targets initiative (SBTi) and is aligned with the 1.5°C global warming scenario. This has been selected to be the sustainability performance target (SPT) in Nokia’s SFF that enables the issuance of sustainability-linked financing instruments.

Focusing on this single objective ”helps Nokia to systematically track its GHG emissions reduction across Scope 1, 2 and 3 emissions”. Second-party opinion for the Framework has been provided by Sustainalytics, assessing Nokia’s SPT as “Highly Ambitious” and the company’s selected Key Performance Indicator (KPI), reduction of absolute GHG emissions across its value chain to be “Very Strong”.

Marco Wirén, chief financial officer of Nokia, said: “Complementing our enhanced ESG strategy with the Framework is a logical next step in our progress to strengthen the connection between our ESG and financing strategies.

“We linked the margin of our €1.5 billion revolving credit facility to our sustainability targets already in 2019 and signed our first sustainability-linked guarantee facility in 2022.”

Nomentia and FTS sign cash management partnership

Finnish software company Nomentia said that it has entered into a partnership with Gerrmany’s Finance and Treasury Services (FTS). The partnership calls for FTS to support the implementation of Nomentia solutions for new clients working closely with Nomentia. In addition, FTS will assist Nomentia with project management and technical implementation for clients in the DACH region, aka Europe’s German-speaking countries of Germany, Austria and Switzerland.

“We are excited to welcome FTS as an implementation partner,” said Karl-Henrik Sundberg, Head of Partnerships at Nomentia. “Their strong treasury acumen will be an asset for delivering excellent implementation projects for our clients in the DACH region.”

Consultants from FTS have already been working with Nomentia to become experts on implementing in-house bank, liquidity management, among other cash and treasury management solutions.

“Implementation projects are always intriguing as questions or additional requests may arise that have not been predictable before the start of the project,” said Michaela Friedrich, Managing Director at FTS. “Supporting Nomentia as an independent treasury services provider with our deep expertise and knowledge in treasury, we can provide clients with a remarkable implementation experience and support throughout the project and beyond.”

Swiss fund invests in Southeast Asian renewable energy platform

Swiss fund manager SUSI Partners has teamed up with regional developer Pacific Impact to develop renewable energy assets in Southeast Asia.

SUSI, investing through the SUSI Asia Energy Transition Fund (SAETF) has launched the renewables platform to develop assets in the Philippines, Vietnam, Indonesia, Cambodia, and other Southeast Asian markets. Pacific Impact will act as the developer and project manager for the platform.

The platform is expected to focus on the greenfield development of solar photovoltaic, wind, and hydro assets with the ability to continue through financing, construction, and operation of the assets, SUSI said.

The joint venture with Pacific Impact marks SAETF’s fourth transaction and its entry into the utility-scale renewables space in the region.

SAETF targets energy transition infrastructure investments across Southeast Asia. The fund held a first close in May 2021, receiving investment from the Asian Infrastructure Investment Bank (AIIB) and Dutch entrepreneurial bank FMO, Nordic development finance institutions Norfund and Swedfund, and institutional investors from Germany and Singapore.

Last month SUSI said the Asia energy transition fund is expected to have a final close before the summer.

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