Our most recent stories:
ABS:
Bonds:
Investment:
Trade:
FX:
Banks in China sold a net volume of $3.8bn ($577bn) of FX in August, down 75% from July, according to statistics released by the State Administration of Foreign Exchange (Safe) on September 18. Safe also noted that China’s foreign reserves grew for the seventh consecutive month in August to reach $3.0915tr, up from $10.8 in July.
The renminbi’s upward trajectory is likely to keep capital outflows low, Capital Economics said in a September 18 note.
“If we are right that the renminbi will strengthen further against the US dollar, outflows should remain close to current levels,” said Capital Economics. “At this level, outflows aren’t putting pressure on the People’s Bank of China’s reserves as they are mostly offset by China’s current account surplus.”
The PBoC’s renminbi fix against the dollar was set at 6.5861 this morning, 6bp stronger from Thursday. The NEX CNH benchmark came in at 6.5920 at 4.31pm on Thursday, weaker from 6.5718 on Wednesday.
The dollar index closed at 92.243 on Thursday, down 0.29% from Wednesday, according to Bloomberg. The Thomson Reuters CNY reference index closed at 95.64 on Thursday, up 0.19% from its previous close.
Regulators:
The renminbi’s recent rally has provided China with an opportunity to internationalise the currency, Sheng Songcheng, an advisor to the PBoC, was quoted by a September 21 media report as saying.
"The renminbi exchange rate is steady and going up and the nation's foreign exchange reserves climbed for seven months, and the Belt and Road Initiative is welcomed by foreign countries,” he said. “So I believe we are at the golden time to promote renminbi internationalization.”
But Sheng cautioned that China should not change its exchange rate mechanisms in the near term, given the uncertainties in the world economy.
“What we should do now is maintain the stability of the renminbi,” he added.
The State Council has confirmed the appointments of Zhu Shumin as the deputy chairman of China Banking Regulatory Commission and Zhang Shenfeng as assistant chairperson of China Securities Regulatory Commission (CSRC), Xinhua reported on September 20. The appointment of Zhang, who was previously the chief executive at China Financial Futures Exchange, was originally announced by CSRC on August 30.
Bonds:
The government of Portugal has hired Bank of China, Caixa Geral de Depositos and HSBC to underwrite its planned debut Panda bond, Mario Centeno, the country’s finance minister, was quoted by Global Times as saying on September 21. The sovereign issuer is hoping to sell a Panda bond in a public offering in the interbank market, with a maturity of up to five years and a deal size of about Rmb3bn.
Meanwhile, the Philippines’ Ministry of Finance is gearing up a roadshow in China for its planned Panda bond issuance, according to a September 20 media report. The report noted that the ministry plans to issue a three year Panda bond in October or November, and is waiting for approval from the PBoC.
Issuers wrapped up Rmb4.4tr of deals in China’s bond market in August, according to figures released by the PBoC on September 19.
The central bank also noted that the interbank market made up Rmb3.9tr of this volume, with a daily average trading volume of Rmb425.9bn in August, down 28.7% year-on-year. The exchange market had a daily average trading volume of Rmb21.5bn in the same month, down 20.5% year-on-year.
Investment:
Fund flows under the Mutual Recognition of Funds scheme accelerated in August, according to data released by Safe on September 19. Mainland fund sales in Hong Kong rose from Rmb23.3bn in July to Rmb27.4bn in August, up for the seventh consecutive month. Meanwhile, Hong Kong fund sales in China also grew from Rmb974.5bn to Rmb1.07tr in the same period, which marked the fifth consecutive month of growth.
ANZ has sold its 20%stake in Shanghai Rural Commercial Bank (SRCB), the Australian lender said in a statement on September 18. Baoshan Iron & Steel will China COSCO Shipping Corporation will each take a 10% stake of SRCB from ANZ.
Some 14 foreign companies signed $4.8bn of deals in the Zhejiang free trade zone on September 18, according to a media report. The contracts were signed at a conference promoting commodity trade, which was attended by Chevron, DuPont, BP, Statoil and Sinopec.
Hubs:
The UK does not wish to compete with Hong Kong as the world’s biggest offshore RMB hub, Philip Hammond, chancellor of the exchequer, said at an event in London on September 20.
“Hong Kong is the largest offshore centre for renminbi in the world… This is not a position that London feels competitive about – it is a position we actively support,” he said. “As the Western Hub for renminbi trading, London has gone from next to no trading five years ago to almost Rmb50bn trading a day.”
Hong Kong Exchanges and Clearing (HKEX) has extended the exchange fee waiver for its USDCNH options by six months, the bourse said in a statement on September 19. HKEX had given a six-month waiver for the product upon its launch in March, which would have ended on September 29.
Belt and Road:
China Development Bank (CDB) agreed to provide dollar and renminbi loans to two Egyptian banks, SAIBANK and Banque Misr, on September 17, according to a media report. CDB will lend $40bn to SAIBANK for small and medium-sized enterprises, and Rmb260m for infrastructure construction. CDB committed to providing an RMB loan to Banque Misr in a memorandum of understanding. The two parties have not yet decided on the size of the loan.