The week in renminbi: Shenzhen Connect breaks northbound turnover record, BlackRock eyes long term opportunities with Belt and Road, UOB opens new branch in China

Shenzhen-Hong Kong Stock Connect northbound trading hits new high, BlackRock strategist says Belt and Road will bring about new opportunities in Asia for long term investors, and United Overseas Bank (UOB) opens a new branch in Kunming, Yunnan province.

  • By Noah Sin
  • 27 Nov 2017
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Equities:

  • Northbound turnover on the Shenzhen-Hong Kong Stock Connect reached a new record of Rmb9.1bn ($1.38bn) on November 23, according to figures released by Hong Kong Exchanges and Clearing (HKEX) on November 24. Daily turnover for southbound Stock Connect – including flows through Shanghai and Shenzhen – was HK$21.6bn ($2.77bn) on November 21, the highest since April 2015, according to the bourse.
  • The figures were published following HKEX’s introduction of real-time delivery-versus-payment (RDVP) for northbound Stock Connect transactions, which ensures that securities and payments change hands simultaneously and thus eliminate counterparty risk for market participants. The change was announced by the bourse on November 17 and came into effect from the start of last week.

Belt and Road:


  • The Belt and Road Initiative (BRI) will cement trade linkages across Asia and provide long term investors with new opportunities in the region, Neeraj Seth, head of Asian credit at BlackRock, told a press conference on November 22.
    “That’s what we’re looking at – companies which have the position, from a long term standpoint, to benefit from One Belt One Road,” he said. “There will be a lot of money that goes into infrastructure projects in the region, and [many] economies [which] will benefit from the capital coming in.”
    Separately, Seth argued that global powers have not yet grasped the geopolitical impact of the China-led initiative.
    “If we look back in history, the only time we had a big global player investing in another part of the world was under the Marshall Plan,” he said. “There is not really another precedent that you can compare [BRI] with.”
  • UOB has opened its 17th branch in China, the bank said in a November 23 press release. Located in Kunming, Yunnan province, the new branch will target businesses in Southwestern China which aim to expand beyond the mainland. It will provide a range of cross-border services, including in cash management, FX hedging, project and supply chain financing, according to the press release.
    The bank noted that Yunnan is a key hub for the BRI, with trade between the province and Southeast Asia standing at Rmb39.84bn – or 63% of the province’s trade flow – in the first half of the year. It added that the new branch is well positioned to help businesses in the province to expand into Hong Kong and Southeast Asia.


MRF:

  • Fund flows under the Mutual Recognition of Funds scheme accelerated in October, according to figures released by the State Administration of Foreign Exchange (Safe) on November 24.
    Net sales of Hong Kong funds in China stood at Rmb12.5bn in the month, up from 12.2bn in September. Meanwhile, mainland fund sales in Hong Kong also picked up speed, with net sales rising to Rmb339.8m from Rmb287.9m in September.

FX:

  • China’s FX market recorded a turnover of $1.94tr in October, according to figures released by Safe. This puts the accumulated turnover between January and October at $18.86tr, the regulator said.

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  • By Noah Sin
  • 27 Nov 2017

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