The week in renminbi: China welcomes French underwriters in CIBM, PBoC’s Pan says risk prevention key to FX policy, FTSE Russell makes changes to China indices

China wants to see more French banks underwriting bonds in its interbank bond market, the deputy governor of the People’s Bank of China says financial risk prevention is a key consideration for the country’s FX policy, and FTSE Russell reviews its China-related equity indices.

  • By Noah Sin
  • 04 Dec 2017
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Bonds:

  • China is considering allowing French banks to become lead underwriters – including for Panda bonds – in the country’s interbank bond market, according to a December 1 joint statement released by China and France.
    “France recognises the great potential of the Panda bond market and will encourage French institutions to issue Panda bonds,” said the joint statement. “China will positively consider granting French banks the underwriting licenses, including the lead underwriting license of Panda bonds in the Chinese inter-bank bond market.”
    BNP Paribas was granted the licence to underwrite corporate bonds in China’s interbank bond market (CIBM) in January. The bank can also underwrite financial bonds in the CIBM.

Investment:

  • The joint statement, which came after the fourth high-level economic and financial dialogue between the two countries, also highlighted China’s intention to encourage greater French participation in the qualified foreign institutional investor (QFII) and renminbi QFII (RQFII) schemes.
    “China welcomes the registration of qualified French banks as QFII custodians, so that they can establish domestic custodian functions and therefore increase their securities investment in China, especially in stocks,” said the statement. “China welcomes more applications from French institutions and agrees to increase the RQFII quota of France when appropriate.”

Regulators:

  • Pan Gongsheng, deputy governor of the PBoC, said China will continue to promote the opening of its capital account, easing cross-border trade and investment and deepening the reform of the RMB exchange rate mechanism.
    Pan, whose comments were reported by local media on December 4, said the real economy and preventing financial risk were two key considerations for Chinese policymakers when formulating the country’s FX management policy.
    Pan, who also acts as the head of the State Administration of Foreign Exchange, added that China will also continue to increase the depth of its FX market, enrich the variety of products, expand the number of participants and improve the market’s infrastructure.

Indices:

  • FTSE Russell has added two companies – Focus Media Information Technology and Inner Mongolia Yili Industrial – to its FTSE China A50 index, which tracks the 50 largest A-share companies in China, the index provider said in a November 29 press release. The newcomers replaced China National Nuclear Power and China Shipbuilding Industry, following FTSE Russell’s quarterly review.
    Meanwhile, the index provider dropped Great Wall Motor Company and Huaneng Power International from its FTSE China 50 index, which tracks the largest Chinese stocks listed in Hong Kong, from red chips to H shares.

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  • By Noah Sin
  • 04 Dec 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 19.41
2 CITIC Securities 14.83
3 Agricultural Bank of China (ABC) 13.48
3 Industrial and Commercial Bank of China (ICBC) 13.48
5 China CITIC Bank Corp 12.13

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 29-May-18 CITIC Pacific China 1,000
2 24-May-18 Beijing Enterprises Water Group China 3,000
3 24-May-18 Trafigura Singapore 500
4 09-May-18 Daimler Germany 5,000
5 26-Apr-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 37.43
2 HSBC 14.26
3 Societe Generale 5.31
4 Bank of Taiwan 4.55
4 Cathay United Bank 4.55

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 07-Jun-18 Export-Import Bank of Korea (Kexim) South Korea 1,500
2 23-May-18 QNB Finance Qatar 600
3 16-May-18 First Abu Dhabi Bank PJSC United Arab Emirates 1,100
4 04-May-18 Busan Bank South Korea 500
5 27-Apr-18 Central American Bank for Economic Integration (CABEI) Honduras 2,000