Equities:
The CSRC outlined its plans to pilot Chinese Depository Receipts (CDRs) in a March 22 document, which was made public by the State Council on March 30.
The companies in the scheme must be involved in high-tech industries, such as artificial intelligence, big data and cloud computing.
Overseas-listed red chip companies planning to list CDRs must have a market value of no less than Rmb200bn ($31.8bn), according to the CSRC's guidelines. Chinese companies which are not yet listed overseas and considering A-share IPOs must have an operating revenue of over Rmb3bn in the previous year, and a valuation of no less than Rmb20bn, according to an April 1 Morgan Stanley report.
The CSRC will have the final say over who can participate in the programme. CDRs will be cleared through the China Securities Depository and Clearing.
Policy:
Chinese president Xi Jinping has made preventing financial risks as one of his top three policy priorities, alongside campaigns against poverty and pollution, according to an April 2 Xinhua report.
Xi was speaking at the inaugural meeting of the Central Committee for Financial and Economic Affairs on Monday.
Officials at the meeting said China will reduce the leverage levels of local governments and state-owned companies. It will also tailor policies to tackle different risks in the financial markets, and make use of the Financial Stability and Development Committee (FSDC).
The theme of risk prevention also featured in meetings last week at the China Banking and Insurance Regulatory Commission (CBIRC), which was established at the ‘two sessions’ as part of the Chinese government’s effort to overhaul state institutions.
The newly formed watchdog committed to bringing down corporate leverage, cracking down on the shadow banking sector and safeguarding against systemic financial risk. The CBIRC also said it will help contain the bubble in the property market and draw up plans to further open up the banking and insurance sectors.
The meetings were chaired by Guo Shuqing, chairman of the CBIRC, who was also appointed the party secretary and deputy governor of the People’s Bank of China on March 26.
Meanwhile, Liu He, vice premier, chaired a meeting with officials from the PBoC, the CBIRC and the CSRC on March 27. Liu, who is also a member of the politburo and a top adviser to Xi, said the regulators must strengthen the co-ordination function of the FSDC, and speed up the allocation of responsibilities in regulating the banking and insurance sectors.
Trade:
China has gone ahead with plans to impose tariffs on 128 products from the US, a spokesperson from the MofCom said in an April 2 statement.
The tariffs, which range from 15% to 25% and cover products from fruits to recycled aluminium, were proposed by MofCom on March 23. The measures are part of China’s retaliation against Washington’s plans to tax Chinese steel and aluminium, said the spokesperson.
“We hope the US withdraws the measures which are against the rules of the World Trade Organization,” said the spokesperson.
Bonds:
The Philippines wants to tap the Panda bond market regularly after sealing its debut deal on March 21, Carlos Dominguez, the country’s finance secretary, told local media last week.
In a text message to reporters, the official hailed the sovereign’s recent Rmb1.46bn transaction, which was oversubscribed by six times, with 87.7% of the bond bought by offshore investors.
“The Philippines government’s successful inaugural issuance of Panda bonds highlights the investor confidence that the country enjoys on the back of its strong credit profile,” said Dominguez.
Meanwhile, the Canadian province of Quebec is working towards its debut in the Panda market, Carlos Leitao, finance minister at the provincial government, told media last week.
Leitao, who said he discussed the issuance plans with Chinese bank officials and investors in January, revealed that the regulatory process for the issuance has already begun.
“It’s not a matter of years, it’s a matter of quarters,” he said.
Quotas:
Taiwan’s Mega International Investment Trust was the only investor to obtain new qualified foreign institutional investor (QFII) quotas in March, according to the State Administration of Foreign Exchange (Safe). The firm scooped $200m of quota, with its aggregate quotas standing at $380m.
Meanwhile, Investec Asset Management was the sole recipient of RMB QFII (RQFII) quotas last month, taking home Rmb3bn and bringing the total of its RQFII quotas to Rmb4.5bn, according to Safe. The asset manager got its first batch of quotas in October 2014, GlobalRMB data shows.
MRF:
Northbound flows under the Hong Kong-Mainland China Mutual Recognition of Funds (MRF) programme slowed down for the third consecutive month in February, according to Safe’s data. Overall net sales of Hong Kong funds in the mainland stood at Rmb11.8bn, down from Rmb12.3bn in January.
Southbound flows accelerated in the same period, with overall net sales of Mainland funds in Hong Kong at Rmb430.6m, up from Rmb398.2m in January.
Payments:
The renminbi fell two places in the league table of the world’s most used payments currency in February, Swift’s RMB tracker shows.
The currency accounted for 1.56% of all international and domestic payments. However, when taking RMB payments within Hong Kong, the biggest offshore RMB hub, out of the picture, the renminbi had a market share of only 1%, putting it in eighth place, behind the Australian dollar, which had a market share of 1.49%.
The value of RMB payments was down 18.28% month-on-month, compared to a decline of 12.69% on average among all currencies. Swift attributed the renminbi’s sluggish performance to the Chinese New Year holiday in February.
Hubs:
RMB deposits in Hong Kong shrunk by 0.7% to Rmb550.4bn in February, the Hong Kong Monetary Authority (HKMA) said in a March 29 press release. Remittance of RMB for cross-border settlement stood at Rmb301.6bn, down from Rmb373.4bn from January, according to the HKMA.
Hong Kong Exchanges and Clearing's (HKEX) offshore renminbi (CNH) futures hit a new record on March 28, with trading volume reaching $605m or 6,049 contracts, the bourse said on Twitter. The contract’s average daily volume is up 78% year-on-year in the first quarter, HKEX added.
Commodities:
China is planning to pay for oil imports with the renminbi instead of the dollar, a March 29 media report claimed, citing three sources close to the policy decision. The country is gearing up for a pilot programme to settle oil trades in RMB in the second half of this year.
The news came after China launched the first RMB-denominated oil futures contract on March 26. The product is traded on Shanghai International Energy Exchange.
Swap lines:
The PBoC has renewed its bilateral swap line with the Reserve Bank of Australia, the Chinese central bank said in a March 30 statement. The size of the swap line has been kept at Rmb200bn.
The PBoC has 33 active bilateral swap agreements with central banks across the world, worth Rmb3.1tr, as of April 3, GlobalRMB data shows.
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