mustMost recent stories:
Policy:
China has basically done its part in promoting RMB internationalisation, Zhou Xiaochuan, the PBoC governor told a March 9 press conference at the National People’s Congress (NPC) in Beijing. Zhou, who is due to step down this year, said internationalisation will now be driven by global market participants, and their willingness to use the RMB investment and trade settlement currency.
“The major policies have all been introduced,” he said. “[RMB internationalisation] is a long process. Nobody can force this on others, and everybody will consider this [adopting the RMB] in accordance with their understanding.”
A new PBoC governor will be announced on March 18, according to the NPC’s website.
Lacklustre demand for Hong Kong bonds is the reason behind the absence of a southbound channel for Bond Connect, said Zhou.
“There are fewer products in the Hong Kong bond market, whereas the mainland bond market is much larger, with many enterprises financing and trading in it,” he said. “Practically speaking, it is not difficult to open up the southbound. If there is demand, we can do it anytime.”
Bonds:
Belarus, Pakistan and the Canadian province of Quebec are all lining up their first Panda bond issuance.
Carlos J. Leitão, Quebec’s finance minister, discussed the provincial government’s plans to sell Panda bonds with Chinese regulators during a meeting with Sun Jie, executive vice president at the China Foreign Exchange Trade System (CFETS), on January 10, according to CFETS’ monthly newsletter.
Pakistan is also gearing up for a Panda bond issuance, Miftah Ismail, an adviser to the country’s prime minister, told media this week. The comment came after the International Monetary Fund criticised the government’s management of Pakistan’s finances in a March 6 report.
Meanwhile, Belarus is considering the Chinese bond market as a financing alternative to the European and US markets, as the cost of borrowing in the latter two rises, Kirill Rudy, the country’s ambassador to China told local media on March 6. The sovereign is hoping to obtain an onshore rating this year, said Rudy.
FX:
China’s FX reserves shrunk for the first time in 12 months in February, according to figures released by the State Administration of Foreign Exchange (Safe) on Wednesday. The reserves stood at $3.13tr the end of last month, down $27bn or 0.85% from January.
But the change should not come as a surprise, given the dollar’s strength and volatility in global financial markets in February, Zhou told the March 9 press conference.
“Our reserves are accounted in the dollar,” he said. “If the dollar appreciates or devaluates, the value of other currencies in the reserves, such as the euro or the yen, will also change when converted into the dollar.”
The Philippines’ central bank is drawing up plans to develop a RMB-peso spot market, Nestor Espenilla Jr, governor at the Bangko Sentral ng Pilipinas (BSP), was quoted by a March 9 local media report as saying. The move, which was suggested by Bank of China, is set to promote investment, trade and tourism between China and the Philippines, said Espenilla.
Equities:
Foxconn’s subsidiary in China has won regulatory approval for an IPO in the A-share market, according to a March 8 announcement by the CSRC. The issuer made application with the regulator on February 1, according to a filing on the CSRC’s website.
Payments:
China’s export denominated in renminbi grew by 36.2% to Rmb111.3bn ($17.5bn) year-on-year in February, as import fell by 0.2% to Rmb888.2bn, according to figures released by the country’s General Administration of Customs on Thursday. The trade surplus was Rmb224.9bn in the same month.
MRF:
The CSRC has given the greenlight for pension target funds, a new form of fund of funds (FOF) aimed at retail investors in China, to invest in onshore funds sold through the Mutual Recognition of Funds (MRF) programme with Hong Kong, according to a March 2 document published by the regulator.
Overall net sales of Hong Kong funds in the mainland was Rmb12.3bn in January, down from Rmb12.5bn in the previous month, according to Safe’s data.
Chart of the week:
