This week in renminbi: April 18, 2017

China’s economy grows faster than expected in the first quarter of 2017, the head of State Administration of Foreign Exchange (Safe) meets with the deputy governor of the World Bank, and Citic says demand for cross-border financing activity is on the rise.

  • By Noah Sin
  • 18 Apr 2017
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FX:


  • People’s Bank of China (PBoC)'s renminbi fix against the dollar was set at 6.8849 this morning, up 64bp from Monday. In the spot market, the CNY was trading at 6.8888 as of 9.51am, with the CNH at 6.8833, down 0.12% and 0.08% from their previous close, respectively, according to Bloomberg data.
  • The dollar index was trading at 100.370 as of 8.19am, down 0.08% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 94.01 on Monday, down 0.2% from its previous close.
  • The trade-weighted index by CFETS closed at 93.18 on April 14, down 0.04% from the previous week, with the BIS basket and special drawing rights basket at 94.16 and 95.27, down 0.07% and up 0.02%, respectively.
  • Oesterreichische Nationalbank (central bank of Austria)Bank of Greece and HSBC have been approved to join the interbank foreign exchange market, according to a brief announcement by CFETS.


Economy:


  • China’s economy grew by 6.9% in the first quarter of 2017, up from 6.8% in the last quarter of 2016, according to figures released by the National Bureau of Statistics on April 17.
  • In a memo published on Monday, Bank of America Merrill Lynch said the growth figure exceeded analysts’ expectations and occurred in spite of PBoC’s monetary tightening.
  • “Despite property and monetary tightening measures, [first quarter] investment growth came in above expectations, mainly led by stronger private-sector investment amid improving profit conditions,” said the memo. “Solid investment demand and external demand recovery have in turn helped to boost industrial production growth, especially in the manufacturing sector.”


Regulators:

Indices:


  • Renminbi globalisation hit a three-year low in February this year, according to Standard Chartered’s renminbi globalisation index (RGI) report. The 6.4% drop to 1,786 is the largest month-on-month fall on record.
  • The report attributed renminbi’s retreat to tightening capital controls by Chinese regulators, highlighting the government’s dilemma in balancing internationalisation and currency stability.
  • “The latest RGI drop also adds conviction to our longstanding view that CNY stability comes at the expense of renminbi internationalisation,” said the report. “China achieved its first capital inflows in 34 months in February, but mainly because of less outward direct investment (ODI) and stricter capital controls on outflows.”
  • Citic Bank International Cross-border Banking Demand Index for Q2 of 2017 grew by 0.8 points from the last quarter to 57.2. The bank attributed the growing corporate confidence to steady Chinese economic growth, faster US economic recovery, and slowing renminbi depreciation.
  • Asked if monetary policy or warming US-China ties will change the trend of renminbi depreciation, Liao Qun, chief economist at Citic Bank International, told a press conference on April 12 that the currency is likely to depreciate even further, but will do so at a steadier pace than before.
  • “Renminbi will continue to depreciate because of the forthcoming rate hikes (by the Federal Reserve),” said Liao. “[But] the Chinese central government will not go against this trend. Rather, it will control the scale of renminbi depreciation, and ensure that it will not exceed the scale and pace of dollar appreciation.”
  • Bank of China’s Credits Investment and Financing Environment Difference (CIFED) Index gained 28.5 points in March, marking three consecutive months of gains in 2017. The bank noted a divergence in onshore and offshore debt markets, with rates of return edging higher in the onshore market.
  • On April 11, Shenzhen Securities Information (SSIC), Euronext and Sina signed a memorandum of understanding (MOU) to develop research on big data, stock indexes and cross-border index products. SSIC is a subsidiary of Shenzhen Stock Exchange (SZSE).


Payments:




  • By Noah Sin
  • 18 Apr 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 CITIC Securities 30.19
2 China CITIC Bank Corp 12.38
3 Bank of China (BOC) 11.61
4 Everbright Securities 10.84
5 China Merchants Bank Co 10.06

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 02-Aug-17 China Gas Holdings China 1,500
2 26-Jul-17 Hungary Hungary 1,000
3 24-Jul-17 China Resources Land China 5,000
4 21-Jul-17 Everbright Water China 1,000
5 21-Jul-17 Maybank Malaysia 1,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 JP Morgan 49.70
2 Barclays 10.06
2 Citi 10.06
2 HSBC 10.06
2 Bank of China (BOC) 10.06

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 01-Jun-17 Ocean Wealth (Parent: China Orient Asset Management) China 632
2 11-Apr-17 Bank of China Johannesburg Branch (BOC Johannesburg) China 1,500
3 22-Feb-17 Ocean Wealth (Parent: China Orient Asset Management) China 850
4 28-Nov-16 Loncin Holdings China 800
5 04-Nov-16 China Nuclear Engineering Group China 1,500