Our most recent stories:
Bond Connect is set to launch in July, but China interbank bond market (CIBM) Direct investors may be barred from the party, market sources told GlobalRMB.
In case you’ve been living on another planet, here’s what you need to know about Bond Connect.
China Citic Bank is issuing its first Panda bond, which will be the first by a financial institution since November 2016, according to GlobalRMB data.
Analysts remain divided over what One Belt One Road will mean for China and its renminbi internationalisation (RMBi) strategy after the Belt and Road forum in Beijing.
In case you missed it, GlobalRMB moderated a webinar on China's bond market on May 15 with speakers from Euroclear Bank, Hong Kong Exchange (HKEX), and Standard Chartered.
The Shanghai International Energy Exchange (INE), a subsidiary of the Shanghai Futures Exchange, took another step towards introducing crude oil futures.
FX:
PBoC’s renminbi fix against the dollar was set at 6.8612 this morning, up 174bp from Thursday. In the spot market, the CNY was trading at 6.8930 as of 12.01pm, with the CNH at 6.8876, down 0.06% and 0.07% from their previous close, respectively, according to Bloomberg data.
The dollar index was trading at 97.790 as of 9.31am, down 0.09% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 93.45 on Thursday, down 0.2% from its previous close.
CNY and CNH have remained stable against the dollar since April despite weaker-than-expected economic indicators in China, according to Natixis. The bank said that renminbi’s stability and the subsequent rebound in foreign reserves were prompted by a weaker dollar. CNY and CNH lost 0.1% and 0.2% against the dollar in April, respectively.
Regulators:
Commercial banks recorded net FX sales of $14.9bn in April, down 37% year-on-year, according to figures released by Safe on Wednesday.
PBoC has set up a FinTech committee, according to an announcement by the central bank on Monday. The committee will look at FinTech’s impact on monetary policy, financial markets, financial stability, payment and clearing, and explore ways to strengthen the implementation of regulatory technology (RegTech).
Bonds:
Bank of China’s Credits Investment and Financing Environment Difference ( CIFED ) Index gained 38.2 points in April, marking four consecutive months of gains in 2017.
The bank noted a divergence in yields between onshore and offshore renminbi-denominated bonds, attributing the rise in onshore yields stable capital flows, and the fall in offshore yields to the slowdown in dollar appreciation.
Indices:
Index provider FTSE Russell has launched the FTSE China A Free Indexes. The new indices will incorporate stocks listed on Shanghai and Shenzhen Stock Exchanges, said FTSE Russell in an announcement on May 15.
“Responding to specific demand from mainland Chinese investors, the launch of these free float adjusted indexes builds on FTSE China A Indexes that have proven so popular with international investors,” said Jessie Pak, managing director for Asia at FTSE Russell.
The move followed FTSE Russell’s launch of FTSE China A Innovative Enterprise Indexes and the FTSE China A Stock Connect Index in January.
Trade:
The US treasury secretary has claimed that China’s efforts to stabilise renminbi using its FX reserves is good for US exports, according to media reports. Steven Mnuchin told the Senate Banking Committee on Thursday that Beijing’s policy to prop up its currency is a reversal from years of intervention to make its exports cheaper, but China remains on the Treasury’s watch list of currency manipulators.
Belt and Road:
Foreign banks are seeking more participation in financing Belt and Road projects, according to a statement by China Banking Regulatory Commission (CBRC) seen by Global Times. The report noted that banks from 52 countries and regions had set up 1,036 business units in China in Q1 2017.
Belt and Road can help put renminbi internationalisation back on the agenda, said a report by UBS on Friday. The report noted that most of the investments pledged by China at the Belt and Road forum will be denominated in CNY, and with pressures of capital outflows and renminbi depreciation abating, CNY may become the dominant investment vehicle for Belt and Road projects.