FTSE Russell is planning to start its review on including Chinese government bonds (CGBs) in the FTSE World Government Bond Index (WGBI) in 2018, on the back of rising yields onshore and the inclusion of these bonds in other global indices, the index provider said in a July 26 report .
Foreig n investors increased their stake in CGBs by $30.7bn in the second quarter, which marked the largest ever quarterly uptick in foreign holdings of Chinese govvies , said FTSE Russell .
A stable RMB in the first half and looser policies on outflows, such as the abolition of the repatriation cap for the qualified foreign institutional investor (QFII) programme in June and the allocation of outbound quotas in April, helped shore up investor confidence, the index provider added.
FTSE Russell also pointed out that international investors are concerned about the recent wave of corporate bond defaults — 25 such credit events took place in the first half alone. However, this could also be an opportunity for foreign investors, the firm said.
“Due to the rising rate of defaults, many investors expect a further increase in yield premiums for Chinese credit, increasing the difficulty of some companies to refinance maturing debt,” said the report.
GlobalRMB reported in June that FTSE Russell would start the review for the inclusion of CGBs in the third quarter. London Stock Exchange Group, the parent of the index provider, bought WGBI from Citi last August. Analysts estimate that at least $2tr are benchmarked to the index.
In March, Bloomberg-Barclays announced that it plans to include CGBs in its Global Aggregate Index, starting in April 2019.
Carrie Lam, chief executive of Hong Kong, has committed the city to a $10m contribution to the AIIB’s Project Preparation Special Fund, according to a July 26 press release by the development bank. The capital from Hong Kong will take the commitments to this fund to $118m, according to the AIIB.
The fund is set to help low-income countries to secure consulting services for feasibility reviews, environmental, financial and legal assessments, said AIIB. The development bank noted that the fund also provides special grants to make projects more environmental and financially sustainable, which will increase their chances of obtaining AIIB funding.
The State Administration of Foreign Exchange (Safe) published a guide on the foreign exchange management policies of Belt and Road countries, from Singapore to Syria, on July 30. Safe said such policies vary in Belt and Road countries, given that most of them are developing countries, and that such a guide is needed for banks and corporations participating in the Belt and Road initiative.
Singapore-based APS asset management has won the regulatory approval to sell private funds in China, according to a July 25 local media report. The manager also holds a Rmb1.5bn ($220.2m) renminbi QFII (RQFII) quota, according to GlobalRMB data.
Yang Jiacai, the former assistant to the chairman of China’s banking regulator, was handed a 16-year jail sentence and Rmb2m of fines for bribery on July 19, Chinese media reported last week. Prosecutors said Yang took more than Rmb23m in bribes between 1998 and 2017.
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