FX:
PBoC's renminbi fix against the dollar was set at 6.7948 this morning, 23bp stronger than Friday. In the spot market, the CNY was trading at 6.7971 as of 10.58am, with the CNH at 6.7881, flat and down 0.03% from their previous close, respectively, according to Wind data.
The dollar index was trading at 97.149 as of 10.57am, down 0.13% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 94.17 on Sunday, down 0.06% from its last close.
The trade-weighted index by CFETS closed at 93.09 on June 9, down 0.08% from the previous week, with the BIS basket and special drawing rights basket at 93.99 and 94.58, down 0.07% and up 0.19%, respectively.
Regulators:
PBoC is planning to publish new regulations on bitcoin exchanges later this month, amid concerns that exchanges are providing their clients with margin trading services and potential loopholes in their anti-money laundering systems, according to a May 10 local media report. The report noted that bitcoin’s value in China reached Rmb9,740 ($1,433) per unit on May 9, marking a daily increase of 10.6%.
Bond Connect:
Market participants believe that the Bond Connect will not immediately widen the investor base of China’s interbank bond market (CIBM), according to a survey by Bloomberg. Some 80% of market participants said the change will take place over time, compared to 12% who reckoned it will come immediately upon the launch of the link.
The survey, which was conducted at an event attended by 150 market participants in Hong Kong on May 16, also found that a quarter of respondents named the on-boarding process and know-your-client (KYC) requirements as the areas they are most interested in regarding the Bond Connect, with another 25% naming operational efficiency. This was followed by investor eligibility (23%) and how the link will work with the existing channels (23%).
Stock Connect:
The daily average southbound net flows via the two Stock Connect links to Hong Kong reached Rmb1.99bn between May 2 and June 8, up from the daily average of Rmb1.15bn in 2016, according to an analysis by OCBC. Meanwhile, southbound buy and sell turnover made up a daily average of 10.9% of the Hong Kong stock market’s total turnover in the same period, up from 5.5% in 2016.
Tommy Xie, economist at OCBC, said the large flows are one of the reasons behind the Hong Kong stock market’s strong performance recently.
“The increased participation of Mainland investors in Hong Kong’s stock market and the positive effect of bullish stock markets in western countries have helped to push Hang Seng Index up to its highest level since mid-2015,” said Xie. “However, 26,000 appeared to have been a strong resistance for the Hang Seng Index.”
Indices:
Financing costs for renminbi bonds became cheaper offshore than onshore for the first time in 28 months in May, according to Bank of China’s credits investment and financing environment difference index ( CIFED ). The index gained 47.8 points in May to reach 36.3 points, a positive value that shows financing costs of renminbi bonds are lower offshore.
Belt and Road:
Kazakhstan plans to exempt taxes on certain incomes from the China-Kazakhstan Production Capacity Cooperation Fund (CKPCCF), a $2bn fund established by the two countries in December 2016, and supported by China’s Silk Road Fund. The announcement was made during Chinese president Xi Jinping’s visit to Kazakhstan on June 8.
The Silk Road Fund also signed a memorandum of understanding with the interbank consortium of the Shanghai Cooperation Organization (SCO) on June 8, committing both parties to promote diversified investments in the SCO region.
Trade:
Premier Li Keqiang has reaffirmed China’s commitment to globalisation , according to a June 8 report by Xinhua. Speaking to a group of 20 CEOs of multinational corporations, including Dow Chemical, Honeywell, BHP Billiton and Qualcomm, Li said China will continue to allow foreign investors easier access to key sectors using the negative list. Li also discussed trade, regulations and innovation capacity building with the group of business leaders.
Our most recent stories:
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