RMB round-up: Record volumes, a new gold product, and a win for UBS

Singapore Exchange set a new record for its offshore RMB futures contract, a new RMB-denominated gold future kicks off trading in Hong Kong, and UBS Asset Management receives a fund management licence onshore.

  • By Paolo Danese
  • 14 Jul 2017
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Our coverage this week:

  • US asset manager Pimco welcomed the launch of Bond Connect as a step forward in resolving market access for foreign investors but stayed cautious on the prospects for the RMB
  • The Hong Kong Exchange (HKEX) launched a gold futures contract denominated in RMB, with a dollar version launching on the London Metal Exchange, with the product set to give China more say in global gold prices
  • Standard Chartered's renminbi globalisation index saw a further fall in May, touching a 39-month low on the back of shrinking offshore RMB (CNH) liquidity.
  • Red-chip firm Jinmao wrapped up its second Panda outing in 2017

FX:

  • The PBoC CNY fix against the dollar came in at 6.7774 on Friday, the strongest since July 4 and up 28bp on a day earlier, according to CEIC data. In the spot market, the USDCNY was trading at 6.7796, down 0.06%, as of 3:20pm and the USDCNH was flat at 6.7815, according to Bloomberg data.  The CNY and CNH are up 2.35% and 2.77% against the dollar in the year to date, respectively.
  • The dollar index was down 0.08% at 95.649, while the reference CNY index published the Hong Kong Exchange and Thomson Reuters closed at 94.34 on July 13, down 0.2% in the session.
  • The Singapore Exchange saw record volumes of its USDCNH futures in June, reaching $16.3bn, with the 2017 financial year total seeing a 163% growth. The daily average trading volume was 7,411 contracts in June, up 31% from the previous high set in January 2017.
  • SGX USDCNH futures represent some 70% of total market activity in exchange-traded futures as of June, the company said.
  • German-headquartered firm Siemens Financial Services was approved by the China Foreign Exchange Trading System to become a member of the interbank FX derivatives market, CFETS said on July 10. The trading platform also approved the Hong Kong branches of BNP Paribas and Industrial Bank to become members of the FX spot, forwards, swaps and options onshore interbank market.

Trade:

Hubs:

  • Korea's RMB deposits retreated in June by 6% to Rmb8.27bn, back to February 2017 levels and down 33.9 from a year earlier.
  • HKEX's newly launched CNH- and dollar-denominated gold futures launched on July 10 saw 3,098 contracts traded on their first day trading session, with 70.5% of the volume going to the CNH contracts, the exchange said.

Investment:

  • UBS Asset Management (UBS AM) became the first qualified domestic limited partner (QDLP) institution to receive a private fund management in China, the firm said on July 13. Through a wholly foreign-owned enterprise (WFOE), UBS AM will be able to market onshore funds to local institutional and high net worth individuals.
    The firm established a joint venture with State Development & Investment Corporation (SDIC) in 2005 and later set up a WFOE in 2011 to focus on investment management and advisory for investment in alternatives.
    "With the continued liberalisation of China’s economy, domestic investors can be expected to seek to diversify their investments across a broad and expanding range of traditional and alternative asset classes and geographies," said  Aries Tung, head of strategy and business development, China at UBS AM, in a statement.
  • New York-based KraneShares, a provider of exchange-traded funds focusing on China equities, was acquired by China Investment Capital Corporation (CICC), the US firm announced on July 10.

SSAs:

  • The Asian Infrastructure Investment Bank (AIIB) received a AAA rating from Fitch on July 13. This is the multilateral bank's second rating of the highest level, after the one it received from Moody's at the end of June.
    Fitch said it would consider downgrading the organisation if its equity-to-assets ratio fall below 25%, its average asset quality drops to an average rating of B+ or lower, or its risk management policies take longer than expected to be implemented.
  • By Paolo Danese
  • 14 Jul 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 28.78
2 CITIC Securities 22.01
3 China CITIC Bank Corp 10.16
4 Industrial and Commercial Bank of China (ICBC) 7.90
4 Everbright Securities 7.90

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 19-Sep-17 Skyworth Digital Holdings China 2,000
2 14-Sep-17 Bank of China (Hong Kong) (BOCHK) China 9,000
3 05-Sep-17 Joy City China 1,000
4 01-Sep-17 Rusal Russian Federation 500
5 23-Aug-17 Daimler Germany 5,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 JP Morgan 38.18
2 Standard Chartered Bank 23.18
3 Barclays 7.73
3 Citi 7.73
3 HSBC 7.73

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 22-Sep-17 Royal Bank of Canada Canada 900
2 01-Jun-17 Ocean Wealth (Parent: China Orient Asset Management) China 632
3 11-Apr-17 Bank of China Johannesburg Branch (BOC Johannesburg) China 1,500
4 22-Feb-17 Ocean Wealth (Parent: China Orient Asset Management) China 850
5 28-Nov-16 Loncin Holdings China 800