This week in renminbi: China to ease foreign investment in A-shares, Switzerland renews swap line, IMF says RMB stable

China plans to increase a limit on foreign equity investors, the PBoC renews a currency swap line with Switzerland, and the International Monetary Fund (IMF) says the renminbi is broadly moving in line with fundamentals.

  • By Noah Sin
  • 31 Jul 2017
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Regulators:



Speaking at a State Council meeting, Li also said the smaller negative list used in the country’s free trade zones should be rolled out to other parts of the country as soon as possible. China uses so-called negative lists to detail which sectors foreign investors are not allowed to invest in.



“This will send a strong signal of increasing the inflow of foreign capital, and stimulate zest for competition among domestic enterprises,” said Li.


  • In a reshuffle of ministers on July 28, the State Council named vice premier Zhang Gaoli as the leader of the snappily-titled coordination group on government function transformation and minister of finance Xiao Jie as one of the nine team leaders in the group. The group is in charge of regulatory reform in areas such as investment approvals and commercial regulations.

Swaps:

  • The People’s Bank of China has renewed its bilateral currency swap agreement with the Swiss National Bank, according to a July 27 announcement by the PBoC.



The agreement, effective for three years, will keep the size of the swap line at Rmb150bn ($22.3bn), and can be extended upon consent by both parties. The PBoC said the agreement will help provide liquidity for bilateral trade between the two countries and safeguard the stability of financial markets.


Belt and Road:

  • The Silk Road Fund has acquired a 5% stake in Italian transportation operator Autostrade per l’Italia S.p.A (ASPI), according to an announcement by the Fund on July 26. The acquisition will help the Fund to diversify its existing assets portfolio and build partnerships with investors and operators in infrastructure, the Fund said in the announcement.

FX:

  • The PBoC’s renminbi fix against the dollar was set at 6.7283 this morning, 90bp weaker from Friday. In the spot market, the CNY was trading at 6.7256 as of 10.38am, with the CNH at 6.7279, up 0.17% and 0.14% from their previous close, respectively, according to Bloomberg data.



The dollar index was trading at 93.373 as of 10.26am, up 0.12% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 93.63 on Sunday, down 0.12% from its previous close.



The trade-weighted index by CFETS closed at 92.74 on July 28, down 0.18% from the previous week, with the BIS basket and special drawing rights basket at 93.64 and 93.89, down 0.21% and 0.25%, respectively.


  • The renminbi’s FX rate is broadly stable and moving in line with fundamentals, the IMF said in a July 28 report. But Luis Cubeddu, division chief of the research department at the IMF, said the currency’s stability should not be taken for granted.



“China will have important challenges going forward, including how it goes about rebalancing its domestic economy away from credit, away from investment, and towards consumption,” Cubeddu told a press conference on July 28. “This will be a key area that the authorities … [will be] working on, with a keen eye of maintaining financial stability and containing financial risks.”


Our most recent stories:


  • Panda bond issuance continued its best run of the year last week, with Hungary pricing its Rmb1bn 4.85% 2020 on July 26. György Barcza, chief executive of the country’s debt management office, told GlobalRMB that the sovereign issuer is hoping to tap the Panda market regularly after the debut deal.
  • China Resources Land priced the Panda market’s biggest deal of the year on July 24, raising Rmb5bn from a dual tranche offering shortly after Longfor Properties debuted in the market with a similarly structured bond. China Gas, which is coming to the market on August 1, will also be selling a dual tranche Panda.
  • Everbright Water also issued its debut Panda bond in the exchange market on July 12, but was forced to compromise by selling a shorter tenor note than it wanted, a source on the deal told GlobalRMB.
  • Nissan’s Chinese joint venture has returned to investors with its latest auto ABS, offering a single tranche worth around Rmb2.52bn ($373.8m).
  • Comment: The Panda market is booming, but there is one group of participants missing – long term investors. Their absence in Panda order books reflects a key risk at the heart of China’s financial system.



  • By Noah Sin
  • 31 Jul 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 21.76
2 Agricultural Bank of China (ABC) 15.11
2 CITIC Securities 15.11
4 China CITIC Bank Corp 13.60
5 Industrial and Commercial Bank of China (ICBC) 10.58

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 26-Apr-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500
2 26-Apr-18 Trafigura Singapore 500
3 23-Apr-18 CAR Inc Hong Kong 730
4 11-Apr-18 China Jinmao Holdings China 3,000
5 11-Apr-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,200

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 33.22
2 HSBC 15.79
3 Bank of Taiwan 5.04
3 Cathay United Bank 5.04
5 Societe Generale Securities Services 4.37

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 04-May-18 Busan Bank South Korea 500
2 27-Apr-18 Central American Bank for Economic Integration (CABEI) Honduras 2,000
3 24-Apr-18 CAR Inc China 350
4 19-Apr-18 Shui On Development (Holdco for Shui On Land) China 600
5 10-Apr-18 Bank of China Taipei Branch (BOC Taipei) China 3,000