RMB round-up: Safe official wants CNH and CNY to merge, AXA IM launches short dated China bond strategy, ex-HKMA head urges RMB trading for HK stocks

The State Administration of Foreign Exchange (Safe)’s deputy head says the onshore and offshore renminbi markets should merge, AXA Investment Managers (AXA IM) launches a new strategy to buy short dated onshore RMB bonds, and the ex-boss of the Hong Kong Monetary Authority (HKMA) suggests Hong Kong-listed stocks should trade in renminbi.

  • By Noah Sin
  • 15 Sep 2017
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  • There should not be a difference in price between the onshore and offshore renminbi, Lu Lei, deputy head of Safe, was reported by media as saying on September 13. Lu said having a single renminbi would eliminate opportunities for arbitrage, but did not provide a timetable for merging the two markets.
    “In an ideal situation, there should be only one unified yuan price in the global markets,” Lu said. “[The renminbi] can be traded in different places in different time zones, but the trading parties should be the same and there should be no gaps between onshore and offshore prices.”
    Lu noted that this is his personal view, not that of Safe’s. He was appointed by Safe in July, having previously worked as the head of the financial stability bureau at the People’s Bank of China, according to local media reports.


  • AXA Investment Managers (AXA IM) has launched a new fixed income strategy that focuses on buying onshore Chinese bonds with maturities of less than three years and an average rating of BBB+, the asset manager said in a statement on September 14.
    AXA IM said building a portfolio of short-dated bonds could help its investors avoid risks deriving from volatile levels of interest rates.
    “Shorter duration also mitigates credit risk with greater visibility into an issuer’s cash flow sources and needs,” said AXA IM. “This allows the manager to build higher conviction and higher yielding positions while mitigating the impact of inflation and interest rate risk through diversification.”


  • Offshore yields for renminbi bonds fell below onshore ones in August, according to Bank of China’s Credits Investment and Financing Environment Difference Index (CIFED). The index gained 85.26 points to reach 64.85 points in the month, up from negative 20.4 points in July. A positive value shows financing costs of renminbi bonds are lower onshore.
    BOC attributed the index’s rise to higher onshore yields and a weaker dollar.
    “In the onshore market, yields generally rose in August,” said the bank. “In the offshore market, as the dollar continued to weaken and the renminbi continued to strengthen, the prices of offshore renminbi [bond] transactions were close to those of onshore renminbi."


  • Barclays has estimated that there could as much as $270bn of capital inflows into Chinese fixed income, once Chines bonds are included in the benchmark bond indices, according to a September 13 media report. The bank said full inclusion could take place in the next one to two years.


  • Hong Kong should allow stocks listed in the city to be denominated in the renminbi, Joseph Yam, former head of the Hong Kong Monetary Authority (HKMA), has said.
    He argued that as most of the activities in Hong Kong by foreign investors and fundraisers are currently conducted in the Hong Kong dollar, volatilities in capital flows could threaten the monetary stability of Hong Kong. Permitting stocks to trade in the renminbi could help moderate that risk.
    “It may be wise to make it convenient for stocks listed in Hong Kong to be priced, traded and settled in the renminbi as well as in Hong Kong dollar,” Yam wrote in a September 14 blog post.


  • Hong Kong Exchange and Clearing (HKEX)’s CNH gold futures recorded a daily average trading volume of 421 contracts since the beginning of September, with open interest standing at 482.
    The product had an average daily trading volume of 383 contracts in August, down from 923 contracts in July. The open interest was 334 and 506 in July and August, respectively.
    HKEX launched the product on July 10. It is the first RMB denominated gold futures contract on the exchange.

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  • The PBoC’s renminbi fix against the dollar was set at 6.5423 this morning, 42bp stronger from Thursday. The NEX CNH benchmark came in at 6.5572 at 4.31pm on Thursday, down 300bp from Wednesday.
    The dollar index closed at 92.175 on Thursday, down 0.37% from Wednesday, according to Bloomberg. The Thomson Reuters CNY reference index closed at 95.88 on Thursday, down 0.09% from its previous close.

  • By Noah Sin
  • 15 Sep 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 28.62
2 CITIC Securities 21.06
3 China CITIC Bank Corp 9.72
4 China Merchants Bank Co 9.18
5 Industrial and Commercial Bank of China (ICBC) 7.56

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 22-Nov-17 Province of British Columbia Canada 1,000
2 15-Nov-17 Daimler Germany 4,000
3 13-Oct-17 Global Logistic Properties Singapore 1,000
4 19-Sep-17 Skyworth Digital Holdings China 2,000
5 14-Sep-17 Bank of China (Hong Kong) (BOCHK) China 9,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 31.63
2 BNP Paribas 16.57
3 HSBC 14.01
4 JP Morgan 13.39
5 Credit Agricole 11.30

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 15-Nov-17 Bank of China Paris Branch (BOC Paris) China 1,000
2 02-Nov-17 Hitachi Capital (UK) United Kingdom 500
3 27-Oct-17 Korea Development Bank (KDB) South Korea 1,400
4 19-Oct-17 Commonwealth Bank of Australia (CBA) Australia 1,500
5 11-Oct-17 BMW Finance NV The Netherlands 1,000