This week in renminbi: March 20, 2017

China Banking Regulatory Commission (CBRC) relaxes restrictions on foreign banks, China sees first net capital inflow in almost three years, and Goldman Sachs estimates $54bn of southbound flows to Hong Kong via Stock Connect by the end of 2017.

  • By Noah Sin
  • 20 Mar 2017
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FX:


  • People’s Bank of China (PBoC)’s onshore renminbi (CNY) fix against the dollar came in at 6.8998 this morning, up 125bp from March 17. As of 9:30am, CNY is trading at 6.9100, down 0.17% from the previously close, with CNH (offshore renminbi) at 6.8907, down 0.06%, according to Bloomberg.
  • The dollar index is down 0.07% from Friday, trading at 100.230, according to Bloomberg. The Thomson Reuters CNY reference index closed at 94.10 on March 19, down 0.20 points from March 17. The trade-weighted index by CFETS closed at 93.32 on March 17, down 0.91 points, with BIS basket and special drawing rights basket at 95.50 and 95.14, down 1.02 and 0.53 points, respectively.
  • PBoC will inject Rmb60bn into the money markets through seven-day reverse bond repurchase agreements, Rmb20bn through 14-day reverse repurchase agreements (repos), and an additional Rmb20bn through 28-day reverse repos, according to Reuters.
  • In February, China experienced a net capital inflow for the first time in three years, according to Capital Economics' report published on March 17. The consultancy attributed this phenomenon to tightening capital controls by PBoC, upbeat economic data, and dwindling concerns about renminbi’s depreciation.
  • Meanwhile, Natixis observed that renminbi is experiencing a rebound from early January. In a report published Monday, the French bank argued that a more hawkish Federal Reserve and a stronger US dollar have put both CNY and CNH under depreciation pressure in February.


Bonds:

  • China will actively seek to issue more green bonds, according to the country’s environment minister. At the China Development Forum in Beijing on March 19, Chen Jining suggested that financial products, such as green bonds, credit and insurance can help, not hinder, China’s economic development.

Regulators:


  • On March 18, CBRC relaxed licensing rules for foreign banks to underwrite treasury bonds, and offer custodian and financial advisory services without prior approval. In an online announcement, CBRC said the move will form part of China’s “One Belt One Road” strategy, and hoped that foreign banks will help Chinese companies issue bonds, conduct IPOs and M&A overseas. In addition, the change will also allow foreign banks to invest in Chinese banks and financial institutions.
  • PBoC governor Zhou Xiaochuan said China’s financial system is in good health overall, but the high leverage ratio, risks from shadow banking, debt and property markets still pose risks to the economy. Zhou made the remarks at a BRICS finance ministers and central bank governors’ meeting in Germany on March 17. China will chair the BRICS leaders’ meeting in September this year.
  • Cross Border Interbank Payment System (CIPS) announced that 10 financial institutions, including Agricultural Bank of China’s Dubai branch, have been approved as renminbi cross-border payment system’s indirect participants, effective as of March 17.


Stock Connect:

  • Southbound flows via the Shanghai- and Shenzhen-Hong Kong Stock Connect will increase by $32bn to $54bn this year, said Goldman Sachs’s chief China strategist, Kinger Lau. According to local media, the Wall Street bank argued that long-term asset diversification demand is in the rise as China’s per capital income continues to grow, bringing more capital to Hong Kong.

  • By Noah Sin
  • 20 Mar 2017

Panda Bonds Top Arrangers

Rank Arranger Share % by Volume
1 Bank of China (BOC) 18.01
2 Everbright Securities 16.95
3 Agricultural Bank of China (ABC) 10.59
4 HSBC 6.99
5 Industrial and Commercial Bank of China (ICBC) 6.36

Bookrunners of Asia-Pac (ex-Japan) ECM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 19 Apr 2017
1 China International Capital Corp Ltd 5,979.41 23 8.62%
2 CITIC Securities 5,733.11 24 8.26%
3 Goldman Sachs 4,331.34 14 6.24%
4 China Securities Co Ltd 3,641.05 21 5.25%
5 UBS 3,599.31 16 5.19%

Bookrunners of Asia Pacific (ex-Japan) G3 DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 11 Apr 2017
1 HSBC 12,683.81 72 4.73%
2 Citi 9,683.70 55 3.61%
3 JPMorgan 9,547.26 48 3.56%
4 Morgan Stanley 7,224.90 33 2.69%
5 Standard Chartered Bank 6,398.04 37 2.38%

Asian polls & awards

  • RMB internationalisation: 10 questions for the market, part 2

    Every year, our sister publication Asiamoney carries out an Offshore RMB Poll. As part of that process, the magazine asks the market for its thoughts on important renminbi topics. In this third year, we received around 2,300 valid responses, up 3% on a year ago. The ten questions included a new one on the inclusion of onshore RMB assets in global indices. Here we present the answers to the final five questions.

  • RMB internationalisation: 10 questions for the market, part 1

    Every year, our sister publication Asiamoney carries out an Offshore RMB Poll. As part of that process, the magazine asks the market for its thoughts on important renminbi topics. In this third year, we received around 2,300 valid responses, up 3% on a year ago. The ten questions included a new one on the inclusion of onshore RMB assets in global indices. Here we present the answers to the first five questions.

  • Made in China: The best banks and deals of 2016

    You know who won, now find out why. GlobalCapital Asia and Asiamoney present the extended results of our 2016 China Deals and Investment Bank of the Year awards, recognising achievement both on and offshore.

  • Asia’s standout deals

    GlobalCapital Asia and Asiamoney present the extended results for our 2016 Best Country Deals. Discover why these bond, equity and loan transactions delivered outstanding outcomes for issuers and investors.

  • Aussie award winners: The best banks and deals of 2016

    The names have been announced, now find out why they stood out from the crowd. GlobalCapital Asia and Asiamoney present the extended results for our 2016 Australia Deals and Investment Bank of the Year awards, recognising achievement in equities, bonds, loans and investment banking.