Bonds:
China has opened up its interbank fixed income derivatives market to foreign institutional investors using Bond Connect and other channels – with no quota imposed on their investment, the PBoC said on November 9.
“Based on their hedging needs, they can begin transactions such as bond lending, bond forward, forward rate agreement and interest rate swap,” the central bank said in a notice published on China Central Depository and Clearing’s website. “Offshore RMB clearing banks and participant banks can additionally begin bond repo transactions in the interbank bond market.”
The move follows the State Administration of Foreign Exchange’s liberalisation of the onshore FX hedging market in February.
Belt and Road:
Silk Road Fund has signed an agreement with GE Energy Financial Services, GE’s investment arm, to set up an energy infrastructure investment platform, the fund said on November 10. The planned platform will invest in oil and gas as well as renewable sectors in Belt and Road countries.
The agreement came as president Xi Jinping said China welcomes US companies to participate in the Belt and Road Initiative, according to a November 9 state media report.
Hubs:
The average daily volume for the SGX’s USDCNH futures stood at $1.04bn in October, down 22% from September, according to figures released by the exchange on November 8.
In contrast, open interest for the contract was 19,964 contracts worth $2bn, representing an 18% month-on-month growth in the same period.
ETFs:
Krane Funds Advisors (also known as KraneShares), a US-based asset management firm, listed KraneShares MSCI China Environment ETF – an ETF which holds Chinese companies with 50% of their revenues generated from environmentally friendly products and services – on the New York Stock Exchange on November 7.
The new product will capitalise on the Chinese government’s recent policy emphasis on environmental protection, said Jonathan Krane, CEO of KraneShares.
“China is currently undergoing an environmental renaissance, pledging hundreds of billions of dollars to environmental protection projects and policies,” he said. “We believe Chinese companies focused on contributing to a more environmentally sustainable economy may potentially benefit from this focused initiative.”
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