Key developments:
MSCI has overhauled its plans with a proposal that would see A-shares make up just 0.5% of its benchmark Emerging Market index. But the plans could boost chances of A-shares’ inclusion, after three failed attempts in the past.
Sino-Ocean debuted in the Panda bond market, raising Rmb4bn with a dual trancher . The red chip real estate company could come back to the market with Rmb6bn left on its issuance programme.
Meanwhile, Russian aluminium producer Rusal said it is in no hurry to return to the onshore renminbi market, after raising Rmb1bn from its first Panda bond issuance last week.
Asia Securities Industry & Financial Markets Association ( Asifma ) urged Chinese regulators to streamline market access to attract foreign capital. In a report published on Wednesday, Asifma says the current arrangement is too complex and unfair to long-term foreign investors.
Hong Kong Stock Exchange (HKEX) launched its USDCNH options on March 20, the first currency options traded on the exchange. Investors bought 109 options contract on the first day of trading.
Also on March 20, the China Banking Regulatory Commission (CBRC) opened up domestic banking institutions to investment by foreign and joint venture banks. These foreign entities can now underwrite bonds without prior approval from CBRC.
FX:
The PBoC fix against the dollar was set at 6.8845 this morning, down 11bp from Thursday. In the spot market, CNY are trading at 6.8876 and CNH at 6.8761 as of 5.54p.m., down 0.02% and 0.09% from the start of the day, respectively, according to Bloomberg.
The dollar index is trading at 99.687 as of 5.44p.m., down 0.07%. The Thomson Reuters CNH Index remained unchanged at 94.10 from the previous close on Thursday.
Academic Michael Pettis said China ought to take quicker steps on structural economic reform and that it has three to five years to bring down debt level. But the Peking University professor also noted that financial crisis is not imminent, saying: “As long as the regulators are credible, they can always step in and restructure the liabilities. That is why a crisis is unlikely.”
Regulators:
China is preparing for its first regulations on overseas investments, according to the Communist Party’s newspaper, Global Times. Initiated by the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission, the new guidelines will identify the industries that the government encourages companies to invest in.
On March 21, China’s state council appointed Guo Shuqing, chairman of CBRC, and Ding Xuedong, deputy secretary-general of the cabinet, to PBoC’s central bank committee.
At the Chinese Development Forum in Beijing on March 20, Pan Gongsheng, head of Safe, criticised overseas acquisition choices of some Chinese companies, such as football clubs and cinema chains. Pan, who also acts as PBoC deputy governor, said these acquisitions are irrational and add to China’s already high corporate debt levels.
Clearing:
Industrial Commercial Bank of China (ICBC)’s Moscow branch officially started its operation as Russia’s first renminbi clearing house on March 23. The announcement was first disclosed by a deputy governor of the Russian central bank on March 16.
Shanghai Clearing House opened an overseas representative office in London on March 22. The new office will build relationships with investors and regulators in the UK and European Union .
Hubs:
Hong Kong will elect its next chief executive on Sunday. A 1,200-strong committee, which includes the city’s political and economic elite, will make its choice between Carrie Lam, former head of civil service, John Tsang, former financial secretary, and retired judge Woo Kwok Hing.
One Belt One Road:
Thirteen countries joined AIIB on March 23, including Belgium, Canada, Hong Kong and Sudan, upon approval by the development bank.
Australia refused signing up to A$5bn ($3.04bn) of One Belt One Road investment during Chinese premier’s visit, out of fear of alienating the US, according to Financial Times.