Core Viewpoint - The offshore RMB exchange rate is expected to strengthen, prompting hedge fund managers to increase their investments in RMB-denominated assets, particularly Chinese government bonds, anticipating a rise in the RMB against the USD [2][3][5]. Group 1: Hedge Fund Strategies - Hedge fund manager Zhang Gang plans to raise the proportion of RMB assets in his emerging market currency portfolio from 10% to 25% following the RMB's rise above the "7" mark against the USD by the end of 2025 [2]. - Zhang anticipates that if the RMB appreciates to around 6.80 against the USD within the year, the investment could yield over 7% returns due to the fund's leveraged investment nature [4]. - Another hedge fund trader, Yu Yong, has begun increasing offshore RMB positions in a $200 million emerging market portfolio, believing that China's economic fundamentals and improved external trade conditions will support further RMB appreciation [8]. Group 2: Market Sentiment and Predictions - Citigroup's economist predicts that the RMB will strengthen due to China's push for RMB internationalization and easing trade tensions, forecasting a rise to 6.80 against the USD in the next 6-12 months [5]. - There is a growing bullish sentiment among hedge fund managers regarding the RMB, with some speculating that unforeseen events could push the RMB to as low as 6.60 against the USD [6]. - Recent data indicates that the offshore RMB has consistently traded stronger than the onshore RMB, reflecting a more optimistic outlook from foreign capital [7]. Group 3: Caution Among Large Asset Managers - Large asset management firms are taking a cautious approach to increasing RMB assets, focusing on global market conditions and the performance of the US stock market before making significant investments [12]. - Despite some hedge fund managers expressing disappointment, large asset managers have not yet incorporated RMB appreciation into their core investment strategies, limiting the potential impact of RMB appreciation [12][13]. - The differing investment philosophies between hedge funds and large asset managers highlight a preference for event-driven short-term gains among hedge funds, while large asset managers prioritize long-term macroeconomic trends [13].