RMB round-up: PBoC eases liquidity, Stock Connect turns three, Neuberger Berman nabs PFM licence

The People's Bank of China (PBoC) conducted its largest weekly liquidity injection since January, the Stock Connect scheme celebrates its third anniversary this week, the Chinese authorities have extended a capital gains tax waiver, and Neuberger Berman was granted a private fund management licence for its China operation.

  • By Paolo Danese
  • 17 Nov 2017
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Bonds:

  • The PBoC intervened in the onshore market by significantly boosting the money supply with a reverse repo operation of Rmb690bn on Friday, bringing the total for the week to Rmb1.15tr, the highest level of reverse repo operations since the third week of January this year, when it injected Rmb1.38tr. (China's central bank defines repurchase agreements in the opposite way to international norms, with repos draining liquidity and reverse repos adding liquidity to the market.)
  • Onshore government bond yields have been spiking as the deleveraging campaign is squeezing investors onshore. Ten year Chinese government bond yields hit a fresh high for the year at 3.94% on November 16 and were trading at 3.92% at 11am on Friday, recovering on the back of the liquidity injection.

Investment:

  • Stock Connect marks its third birthday on November 17, the date on which the Shanghai arm of the link was launched in 2014. The exchange said in a release the channel has seen healthy growth in trading flows.
    As of October 31, total southbound trading has hit HK$3.327tr, with net inflows of HK$637.5bn. The amount of local stocks held by Mainland investors has doubled from the end of 2016 to HK$808.8bn.
    The Northbound scheme has had a harder time gaining traction. Total turnover has been Rmb4.06tr, with net inflows to A-shares of Rmb326.3bn. Hong Kong and international investors have accumulated Rmb181.4bn in Shenzhen-listed A-shares and Rmb310.3bn in Shanghai.
    “With the upcoming inclusion of A shares into major international indices enabled by Stock Connect, I have no doubt Hong Kong will continue to play a vital role in connecting China with the world,” Charles Li, chief executive at HKEX, said in a statement.
  • Southbound investors using the Shanghai Stock Connect channel were also granted a new capital gains tax waiver for investments done through the scheme. The waiver renews an existing arrangement and also harmonises the deadline for the waiver across the Shenzhen and Shanghai arms of the link until December 4, 2019. HSBC noted in a November 13 memo to clients that the CGT exemption for qualified foreign institutional investors, RMB QFIIs, and northbound Stock Connect investors has no time limit. 
  • Neuberger Berman joined the growing crowd of foreign asset managers receiving a private fund management licence from the Asset Management Association of China (AMAC) on November 16, following its establishment of a wholly-owned foreign enterprise. The firm said it already manages portfolios for Chinese institutional and intermediary customers across in equity, fixed income and private equity strategies. NB added two senior members to the China team this year, Bin Yu, equity portfolio manager, and Peter Ru, a fixed income-focused senior portfolio manager.
  • By Paolo Danese
  • 17 Nov 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 09-May-18 Daimler Germany 5,000
2 26-Apr-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500
3 26-Apr-18 Trafigura Singapore 500
4 23-Apr-18 CAR Inc Hong Kong 730
5 11-Apr-18 China Jinmao Holdings China 3,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 35.60
2 HSBC 15.23
3 Bank of Taiwan 4.86
3 Cathay United Bank 4.86
5 Societe Generale Securities Services 4.21

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-May-18 First Abu Dhabi Bank PJSC United Arab Emirates 1,100
2 04-May-18 Busan Bank South Korea 500
3 27-Apr-18 Central American Bank for Economic Integration (CABEI) Honduras 2,000
4 24-Apr-18 CAR Inc China 350
5 19-Apr-18 Shui On Development (Holdco for Shui On Land) China 600