China Asset Management (ChinaAMC) (Hong Kong) has listed the first ETF that tracks Chinese treasuries and policy bank bonds in Hong Kong, the company said in a June 6 press release .
Th e ETF references the Bloomberg Barclays China Treasury + Policy Bank Index, a sub-index of the Bloomberg Barclays China Aggregate Index, which includes China’s RMB-denominated treasuries and policy bank bonds with maturities of no less than one year in the onshore interbank bond market .
Th e asset manager was drawn to the idea of launching this ETF as international investors’ interest in Chinese bonds grew, especially after the decision by Bloomberg Barclays in March to include the bonds in its benchmark Global Aggregate Index, Frank Xiaoling Zhang, CEO of ChinaAMC (Hong Kong).
“We see emerging opportunities in this market and are pleased to select Bloomberg as the benchmark index provider for our first China fixed income ETF,” he said. “China’s high grade government bonds with the most liquidity and least credit risk make it a primary choice for investors who are taking the first step to investing in China’s bond market.”
Schroders’ Shanghai-based wholly foreign-owned enterprise has launched its first domestic private fund, which focuses on buying Chinese A-shares, the company said in a June 6 press release. The fund will be sold to local high net-worth individuals and institutions.
The fact that the Chinese equity market is at an early stage of development creates an opportunity for a fund like Schroders’ to grow, said Jack Lee, head of China A-share research at the asset manager.
“We see this market as one of the most attractive in the world for generating relatively higher returns for our investors,” he said. “We believe active, fundamentals-driven stock-picking is the best approach to exploit market inefficiencies as many of the best investment ideas have not been well-researched.”
China’s FX reserves shrunk by $14.2bn or 0.46% in May to $3.11tr, according to a June 7 statement by the State Administration of Foreign Exchange (Safe) .
Marke t forces, not policy, was behind the fall, said Julian Evans-Pritchard, senior China economist at Capital Economics. He attributed the move to a stronger dollar, which led to a lower dollar value for assets in the reserves held in other currencies.
“Our model suggests that the fall in headline FX reserves in May can be entirely explained by valuation effects,” he wrote in a June 7 memo.
Central banks are keen to add more RMB assets to their FX reserves, according to a report by the European Central Bank (ECB). The report said 29 out of 79 reserves manager in a survey expected the renminbi to make up 10% to 20% of their portfolios by 2020.
Hong Kong Exchanges and Clearing’s RMB futures contracts recorded an average daily turnover of 5,429 contracts from January to May, up 77% from the same period last year, according to figures released by the bourse . The USDCNH contract was the most active, and had a daily average turnover of 5,812 contracts in May, up from 5,289 contracts in April.
Swift has unveiled the list of banks which have been participating in the global payments innovation initiative ( gpi ) since its launch last May.
These banks’ participation will help facilitate the growth of the Belt and Road Initiative, said Swift in a June 5 press release, noting that the platform is providing more predictable settlement times and more transparent bank fees and FX rates for cross-border transactions.
Bank of China, Bank of Communications, Bank of Jiangsu, China Citic Bank, China Construction Bank, China Guangfa Bank, China Minsheng Bank, China Zheshang Bank, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank have been on the platform, and represent about 86% of cross-border payment flows by Chinese banks in the mainland, said Swift.
The Central Bank of Nigeria (CBN) has issued a set of guidelines for Nigerian businesses to utilise the country’s bilateral local currency swap line with China.
Authorised dealers should open RMB accounts with a correspondent bank, which may be located onshore or offshore, said the CBN. The central bank may conduct bi-weekly renminbi bidding sessions to ensure there is enough RMB liquidity for trade with China, and dealers must use the funds from these sessions within 72 hours.
The rules came after an agreement between CBN and the People’s Bank of China to establish a Rmb15bn ($2.35bn) swap line last month.
Jardine Lloyd Thompson (JLT) can now cover all insurance brokerage business lines in China, the insurance brokerage said in a May 25 statement. The move, which came into effect on May 8, puts JLT on an equal footing with its domestic peers, allowing them to provide risk advisory, employee benefits and insurance broking services to local businesses, said the company.