Key developments this week:
- People’s Bank of China (PBoC) has taken a small step toward renminbi internationalisation in its first act of loosening capital controls since 2015. The move will also help China rebuild foreign investors’ confidence in the onshore market, experts told GlobalRMB.
- China Merchants Port (CMP) raised Rmb2.5bn from a Panda bond this week. The company is marketing the bond as a Silk Road bond, even though the proceeds will be used onshore.
- Stock Connect investors are demanding a multi-broker delivery versus payment (DVP) solution to limit counterparty risk issues that have thrown up by the different settlement cycles, Citi’s country head of securities services told GlobalRMB.
- People’s Bank of China (PBoC)'s renminbi fix against the dollar was set at 6.8823 this morning, up 31bp from Thursday. In the spot market, the CNY was trading at 6.8834 as of 4.43pm, with the CNH at 6.8830, down 0.02% and up 0.01% from their previous close, respectively, according to Bloomberg data.
- The dollar index was trading at 99.772 as of 4.36pm, down 0.01% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 93.86 on Friday, up 0.1% from its previous close.
- China had its smallest non-FDI capital outflows ($14.7bn) since September 2014 in March, according to a report published by Standard Chartered on Friday. The report said this phenomenon may lead to gradual loosening of capital controls. “The prospect of more balanced cross-border flows has prompted Beijing to take its first small steps in relaxing window guidance on outflows,” said StanChart’s report.
- BlackRock has backed MSCI to include Chinese A-shares in its benchmark emerging markets (EM) index in June this year, according to The Wall Street Journal. The world’s largest asset manager said the technical issues, which stopped MSCI from including A-shares for three times, have been resolved. GlobalRMB previously reported that BlackRock’s head of equities expressed in March that she is confident that MSCI will include A-shares this year.
- PBoC will take into account the possible market impact when introducing new restrictions on shadow banking, according to the central bank’s chief economist. Speaking at a forum in Washington on April 20, Ma Jun said regulators don’t want the market to
over interpretits regulatory action, according to a report by Bloomberg.
- A former Safe official has urged China to allow more market participants to trade renminbi onshore. Speaking at the Finance 40 Forum on April 20, Guan Tao, a former director of international payments at Safe, said the onshore market is dominated by banks which do not have a lot risk appetite, without which there cannot be price recovery in renminbi.
- Hong Kong investors using the Stock Connect could get more trading days, according to a spokesperson at Hong Kong Exchange and Clearing (HKEX). Bloomberg reported that HKEX is working on a plan to keep bourses in Shanghai and Shenzhen open for a few days before a public holiday in Hong Kong, but the plan is subject to regulatory approval.