The week in renminbi: State Council clamps down on outbound M&A, two RMB indices fall, China is top holder of US treasuries

China’s State Council goes a step further in reining in M&A, two onshore RMB (CNY) weaken, and China is once again the largest holder of US debt.

  • By Paolo Danese
  • 21 Aug 2017
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  • China’s State Council published a new set of guidelines that will govern overseas acquisitions by Chinese businesses. The State Council clarified that Belt and Road-related deals involving Chinese products, technology and services will be allowed but that several types of overseas investments will be restricted.
    “Those on the restriction list include real estate, hotels, entertainment, sports clubs, outdated industries and projects in countries with no diplomatic relations with China, chaotic regions and nations that should be limited by bilateral and multilateral treaties concluded by China,” the State Council said in a statement on August 18.
    The guidelines also state China will prohibit investments that could jeopardise national interests and security in areas including military technology and gambling.
  • China will also step up efforts to prevent regulatory arbitrage, meaning the ability to exploit uncoordinated regulations governing similar sections of the markets, according to media reports. The comments came during a PBoC conference in Beijing held on August 19.
    China has recently established the Financial Stability and Development Commission (FSDC) to enhance coordination among the different market authorities.


  • China's is once again the largest US creditor, with total holdings of US debt up $44bn in June to $1.15tr. Overall, China’s foreign exchange reserves have increased for six straight months to $3.08tr.
  • HMV Digital China Group began discussions with the Luxembourg government to leverage the Belt and Road strategy as a means to access international renminbi capital markets, the firm said on August 18 in a statement.
    “Luxembourg, as one of the largest capital markets in the world, has been deemed a bridge between China and Europe for foreign investors who are looking to the Chinese onshore market for growth opportunities,” the firm said. “As an international RMB centre, Luxembourg is the second largest domicile of funds investing in Mainland China after Hong Kong.”
  • The Brics New Development Bank inaugurated its Africa Regional Center last week, according to Chinese state media. The centre will guide NDB’s efforts in helping Africa’s regional development, according to a foreign ministry spokesperson.


  • The PBoC fix came in at 6.6709, identical to last Thursday’s fix and 35bp stronger than Friday’s. Two of the broader RMB indices, based on the CFETS and Bank for International Settlements baskets, came in at 93.82 and 94.6, or 0.22% and 0.18% weaker, respectively. The Special Drawing Rights basket was up 0.02% at 94.68.
  • The Thomson Reuters reference CNY index, meanwhile, stood at 94.71 at the close of last week, down 0.30% in the week. The dollar recovered slightly last week, ending at 93.43, up 0.4%, but still down 8.57% so far this year.
  • Data published by the PBoC and the State Administration of Foreign Exchange showed declining capital outflows in the month of July. The deficit on foreign exchange settlement and sale by banks on behalf of clients narrowed to US$6.3 billion in July, according to Safe data, the lowest since August 2016, Tommy Xie, economist at OCBC, wrote on August 21.   

Our recent stories:

  • Deutsche Borse is preparing to launch a Bond Connect offering to further facilitate China access, but data from across the market shows global investors are still weighing up China bonds.
  • The International Monetary Fund (IMF) has criticised China for slow progress in opening up its capital account. We argue the IMF is right to call out China, and that apart from the launch of Bond Connect, Chinese regulators have fallen short of delivering their promise of further liberalisations.
  • Ford Automotive Finance (China) returned to China’s auto ABS market on August 17, raising Rmb3.46bn ($518.4m) and becoming the first to attract foreign investors to a Chinese ABS deal through Bond Connect.
  • Peugeot Citroën’s joint venture launched a single tranche auto ABS deal, which is set to price on August 22, after a year-long absence in the market. Ford’s China arm sold its own Rmb4bn ($599.3m) auto ABS on August 17.
  • China Central Depository and Clearing (CCDC) published a report on the onshore securitization market, recommending regulators loosen liquidity and consider opening an offshore RMB ABS market. Here’s a quick guide to what the report said.
  • By Paolo Danese
  • 21 Aug 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Industrial and Commercial Bank of China (ICBC) 35.00
2 China CITIC Bank Corp 30.00
3 China Merchants Securities Co 17.00
4 HSBC 5.00
4 Standard Chartered Bank 5.00

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 09-Feb-18 Sino-Ocean Group Holdings Hong Kong 3,000
2 06-Feb-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,200
3 05-Feb-18 China Merchants Port Holdings (CMP) Hong Kong 500
4 01-Feb-18 The Emirate of Sharjah United Arab Emirates 2,000
5 25-Jan-18 Sino-Ocean Group Holdings Hong Kong 3,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 64.14
2 Deutsche Bank (Taipei) 7.95
3 CLSA 7.22
3 Mitsubishi UFJ Financial Group (MUFG) 7.22
5 CTBC Bank (formerly Chinatrust Commercial Bank) 2.85

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 22-Feb-18 Far East Horizon China 630
2 08-Feb-18 Sinochem Offshore Capital Company China 1,000
3 30-Jan-18 Rabobank The Netherlands 500
4 17-Jan-18 Asian Development Bank (ADB) Philippines 100
5 17-Jan-18 Export-Import Bank of Korea (Kexim) South Korea 270