RMB round-up: China’s FX reserves up for six straight months, first FTSE Russell China ETF lists in Shanghai, StanChart’s RGI marks seven-month long decline

China’s FX reserves grow again in July, Harvest Fund Management lists the first ETF tracking FTSE Russell’s China index on the Shanghai Stock Exchange, and Standard Chartered’s Renminbi Globalisation Index (RGI) falls in June.

  • By Noah Sin
  • 11 Aug 2017
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  • The Hong Kong Exchange will scrap its China Ministry of Finance treasury bond futures by December, less than a year after the product’s debut on April 10, according to the bourse’s interim report.
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FX:


  • China’s FX reserves grew for the sixth consecutive month in June, according to the State Administration of Foreign Exchange (Safe) on August 7. The size of the reserves stood at $3.08tr by the end of July, which marked a month-on-month increase of 0.8% or $239m.
    Julian Evans-Pritchard, China economist at Capital Economics, said the figures demonstrate the pressure of capital outflows has abated.
    “Capital outflows have eased markedly since the start of the year and are now mostly offset by the trade surplus,” wrote Evans-Pritchard in an August 7 note. “This shift should prove supportive of the renminbi, which we think will strengthen against the US dollar during the next couple of years.”
    Evans-Pritchard also noted the figures may mark the first month since October 2015 in which the PBoC was not a seller of FX. But that will not be confirmed until the central bank publishes its balance sheet later in August.
  • The PBoC’s renminbi fix against the dollar was set at 6.6642 this morning, 128bp stronger than Thursday, whereas NEX Data’s EBS USDCNH benchmark rate was 6.6948 at 4.30pm on Thursday.
  • In the spot market, the CNY was trading at 6.6693 as of 11.40am, with the CNH at 6.6866, down 0.34% and 0.30% from their previous close, respectively, according to Bloomberg data.
  • The dollar index was trading at 93.363 as of 11.30am, down 0.04% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 94.94 on Thursday, up 0.17% from its last close.


Regulators:

  • Hong Kong’s chief executive, Carrie Lam, met with Zhou Xiaochuan, governor of the PBoC, on August 8. The pair discussed the development of Hong Kong’s offshore renminbi business, the city’s participation in One Belt One Road (OBOR), and enhancing financial co-operation between the two markets.
  • Lam also met with several other regulators in Beijing, including He Lifeng, chair of the National Development and Reform Commission (NDRC). Following the meeting, the Hong Kong government and the NDRC agreed to begin discussions on signing a bilateral agreement on Hong Kong’s role in OBOR. This will outline the areas in which Hong Kong will participate, such as financing and fundraising, according to an August 8 statement by the city's government.

ETFs:

  • Harvest Fund Management has launched the first domestically listed ETF index tracking a FTSE Russell index, according to a statement by the index provider. The asset manager listed the Harvest FTSE China A50 Index ETF on Shanghai Stock Exchange on August 7.
  • ETF fund manager WisdomTree has added A-shares to two of its ETFs, according to an August 8 press release. The 50 largest private onshore-listed companies will be added to the underlying indices of the WisdomTree China ex-State-Owned Enterprises Index and the WisdomTree Emerging Markets ex-State-Owned Enterprises Index, which will have a 25% and 5% cap for A-shares, respectively.

RMBi:


  • StanChart’s RGI suffered a 4.8% month-on-month fall in June, the bank said on August 7. The index, which measures activities in offshore renminbi centres, reached 1,622 points by the end of June, the lowest since January 2014.
    Kelvin Lau, senior economist, Greater China, at StanChart, blamed falling cross-border renminbi payments and the stagnant dim sum market – issuance volume for which reached the lowest point since January – for the index’s fall. But he argued there are reasons to be optimistic.
    “Recent comments from PBoC officials and state media have called for a freer CNY, fuelling talk of a widening of the daily trading band,” wrote Lau in the August 7 report. “Such a move would send a strong signal to the market without creating much immediate risk (as the current +/-2% band has not been fully utilised).”


Hubs:

  • The Singapore Exchange released its monthly statistics for July, showing USDCNH futures volume stood at 150,567 contracts – down 8% month-on-month and up 416% year-on-year. Meanwhile, FTSE China A50 Index Futures remained the most active contract on SGX with a volume of 5.6m contracts, down 7% month-on-month and up 11% year-on-year.
  • By Noah Sin
  • 11 Aug 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 28.15
2 CITIC Securities 21.52
3 China CITIC Bank Corp 9.93
4 China Merchants Bank Co 9.38
5 Industrial and Commercial Bank of China (ICBC) 7.73

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 13-Oct-17 Global Logistic Properties Singapore 1,000
2 19-Sep-17 Skyworth Digital Holdings China 2,000
3 14-Sep-17 Bank of China (Hong Kong) (BOCHK) China 9,000
4 05-Sep-17 Joy City China 1,000
5 01-Sep-17 Rusal Russian Federation 500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 37.58
2 JP Morgan 18.57
3 HSBC 16.29
4 Credit Agricole 12.53
5 Barclays 3.76

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 19-Oct-17 Commonwealth Bank of Australia (CBA) Australia 1,500
2 11-Oct-17 BMW Finance NV The Netherlands 1,000
3 11-Oct-17 BOC Aviation Singapore 1,000
4 28-Sep-17 National Bank of Canada Canada 600
5 22-Sep-17 Royal Bank of Canada Canada 900