RMB round-up: CDRs launch draws closer, Fed warns ICBC over money laundering, China downsizes US Treasuries stockpile

Regulators prepare for the introduction of Chinese depository receipts (CDRs), the US Federal Reserve scolds Industrial and Commercial Bank of China for failing to comply with anti-money laundering rules, and China holds less US Treasury bonds in January.

  • By Noah Sin
  • 16 Mar 2018
Email a colleague
Request a PDF

Our most recent stories:


Equities:

  • Regulators are preparing to launch CDRs in the near future, opening the door to domestic investors to buy foreign-listed stocks from the onshore market, Yan Qingmin, vice chairman of the China Securities Regulatory Commission told local media on March 15.
    The official was reported as saying that CDRs are an effective way to overcome the regulatory differences between the Chinese and overseas markets. Officials convened a closed-door seminar recently to discuss the draft guidelines for piloting the CDR scheme, according to a March 16 local media report.
  • MSCI has launched 12 Chinese equity indices ahead of the inclusion of A-shares into its Emerging Markets Index this summer, the index provider said in a March 14 press release. This cohort of indices, which will cover A-shares as well as Chinese companies listed overseas, will help investors capture a wider range of opportunities within the Chinese equity universe, according to Theodore Niggli, head of APAC index products at MSCI.
    “With the increased liberalisation and internationalisation of the China market, investors have expressed a clear need for more insight and tools to make better-informed investment decisions,” Niggli stated in the press release.

Banks:

  • The New York branch of ICBC has not done enough to comply with local anti-money laundering regulations, the Fed said in a March 13 order. The bank must write to the Fed within 60 days of the order’s issuance to report on its plans to strengthen compliance. It must also hire an independent firm to audit the bank’s dollar clearing activities between July and December 2016, according to the order. ICBC is the largest bank in the world, with $3.47tr of assets, according to S&P.
  • Natixis is acquiring a majority stake in Vermilion Partners, a Chinese M&A house, the French bank said in a March 12 press release. The move, which is pending regulatory approvals, will allow Natixis to add M&A to its range of services in China, which includes financial advisory, financing and hedging solutions. Vermilion has advised multinational and Chinese private and state-owned companies on inbound and outbound M&A transactions, according to the press release.

Investment:

  • In January, China’s holding of US Treasuries fell to its lowest level since July 2017, according to data published by the US Treasury. But China, which owned $1.17tr of treasuries January, remains the largest holder of Treasuries, ahead of Japan and Ireland, which held $1.07tr and $327.5bn in the same period, respectively.
  • China Investment Corporation (CIC), the Chinese sovereign wealth fund, has sold its stakes in Blackstone, according to a filing by the US private equity company earlier this month. The shares were held by Beijing Wonderful Investments, a vehicle set up and controlled by CIC, which completed the exit from Blackstone on February 16, according to the filing.
  • UBS Asset Management has launched a Ucits fund targeting Chinese bonds, the first Ucits fund to calculate its net asset value in onshore renminbi (CNY), the asset manager said in a March 15 press release.
    The fund will help UBS AM capture international investors’ growing appetite for the onshore market, Ashley Perrott, lead portfolio manager on the fund, said in the press release.
    “Chinese bonds offer very attractive nominal and real yields relative to developed market yields, making the China bond market a compelling investment opportunity,” said Perrott. “This market will continue to attract investor attention as more global indices start to include China in their benchmarks.”
  • Eastspring Investments, the asset management arm of insurance firm Prudential, has launched a wholly foreign-owned enterprise in China, the company said in a March 9 press release. Eastspring is currently applying with the Asset Management Association of China to become a licenced private fund manager, which would allow the company to sell and distribute funds in China.
    The Singapore arm of Eastspring holds Rmb275m ($43.4m) of RMB qualified foreign institutional investor (RQFII) quotas, which were granted in March 2017, according to GlobalRMB data.


FX:

  • Bank of Montreal, Bangko Sentral NG Pilipinas and the Shanghai branch of VTB have been approved by China Foreign Exchange Trade System as foreign currency lending members in the onshore FX market, effective March 15, allowing them to conduct spot and forwards transactions. Bank of Montreal and VTB’s Shanghai branch can also trade swaps in the onshore market.
  • By Noah Sin
  • 16 Mar 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 19.83
2 Industrial and Commercial Bank of China (ICBC) 14.01
3 CITIC Securities 11.86
4 Agricultural Bank of China (ABC) 10.78
5 China CITIC Bank Corp 9.70

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 20-Aug-18 ABC International (parent: Agricultural Bank of China) China 3,000
2 16-Aug-18 Daimler Germany 4,000
3 15-Aug-18 Everbright Water China 800
4 08-Aug-18 Veolia Environnement SA France 1,000
5 19-Jul-18 Beijing Enterprises Water Group China 3,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 33.31
2 HSBC 20.53
3 Societe Generale 4.21
4 Bank of Taiwan 3.60
4 Cathay United Bank 3.60

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 19-Sep-18 Agricultural Development Bank of China (ADBC) China 1,200
2 17-Sep-18 Hitachi Capital (UK) United Kingdom 600
3 13-Sep-18 CIFI Holdings China 1,000
4 05-Sep-18 Daimler Germany 1,000
5 03-Sep-18 First Abu Dhabi Bank PJSC United Arab Emirates 650