China policy round-up: Regulator vows more goodies for QFII, RQFII, Beijing hits back over trade, PBoC rep lashes out again at the finance ministry

The securities watchdog promises more relaxations for inbound investors, officials levy new tariffs on US goods as state media takes aim at critics at home, and a senior central bank official criticises the Ministry of Finance for not doing its job.

  • By Noah Sin
  • 10 Aug 2018
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  • The China Securities Regulatory Commission (CSRC) will relax the entry requirements for investors looking to use the qualified foreign institutional investor (QFII) and RMB QFII (RQFII) programmes to access the onshore capital markets, the regulator said in an August 8 statement.
    The CSRC will also harmonise and standardise the entry requirements for the QFII and RQFII programmes, and expand the scope of their investments. The regulator’s comment came less than two months after China’s FX watchdog scrapped the 20% month repatriation limit for QFII.
    In terms of market liberalisation, the regulator also committed to launching London-Shanghai Stock Connect in 2018, echoing comments by Li Keqiang, the premier, on July 31. The watchdog will also accelerate the process of relaxing foreign ownership restrictions in securities companies. The CSRC moved to the foreign ownership cap in these companies from 49% to 51% in April, implementing the policy set out by the leadership last November.
    On equities, the CSRC is hoping to get A-shares included in FTSE Russell’s global indices and increase the weighting of these stocks in MSCI’s indices. MSCI began including A-shares in its benchmark emerging market index on May 31. The process will complete in August, putting 226 A-shares in the index. But the launch of China Depository Receipt (CDR), previously a key item on the CSRC’s agenda, did not feature on the list, as noted by Hong Kong media. The first potential CDR issuer, Xiaomi, pulled out in June, ahead of its listing in Hong Kong.
  • People’s Daily, the Chinese Communist Party’s mouthpiece, has lashed out at critics of the Chinese leadership’s strategy in the trade conflict with the US.
    In an August 10 editorial, the newspaper rebutted those who suggested that China’s hard line response is responsible for the escalation of the trade war. It argued that the US has a tendency to threaten those who may challenge its status as the world’s most powerful country, citing Washington’s contribution to the collapse of the Soviet Union and its trade conflict with Japan in the 1980s as two examples.
    “After 100 years of effort, China has re-entered the centre of the world stage,” said the article. “This is the fundamental fact that we must understand in observing the Sino-US trade conflicts.”
    The article came after an August 7 media report quoting unnamed senior Chinese officials that are unhappy with president Xi Jinping’s strategy in the trade war, saying that his hawkish stance has only hardened the US position.
    The Ministry of Commerce said it will strike $16bn of US goods with 25% tariffs on August 23, at the same time as the US plans to slap the same rate of tariffs on the same amount of Chinese goods. The additional US tariffs were announced by the US Trade Representative on August 7.
  • The Ministry of Finance should do more to support the economy, Xu Zhong, the head of the research bureau at the PBoC, wrote in an August 8 article in local media. This is the second time Xu has criticised the MoF in public in a month, after Xu said the ministry should expand public expenditure in July.
    The PBoC official stuck to this line of attack this week, saying that the lack of public funding in education, health, social welfare and environmental protection forced the central bank to step in and support the economy, restricting the impact of the PBoC’s macroeconomic adjustments.
    Xu also criticised MoF’s usage of government bond, saying that the ministry has only viewed the bonds as a fiscal instrument used to balance the budget. He said MoF has neglected the impact of government bond issuance on financial markets and their role in monetary policy adjustment, limiting the function of these bonds as benchmarks in the markets.

  • By Noah Sin
  • 10 Aug 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 26.40
2 Industrial and Commercial Bank of China (ICBC) 20.00
3 China Securities 13.33
4 Agricultural Bank of China (ABC) 12.00
5 Bank of China (BOC) 11.33

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 13-Mar-19 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 3,300
2 12-Mar-19 United Overseas Bank (UOB) Singapore 2,000
3 05-Mar-19 BMW Finance N.V. The Netherlands 3,000
4 01-Mar-19 Semiconductor Manufacturing International Corp (SMIC) China 1,500
5 25-Feb-19 New Development Bank China 3,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 46.13
2 UBS 9.55
2 Haitong International Securities 9.55
2 Guotai Junan International 9.55
5 ANZ 5.73

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 13-Mar-19 Daimler International Finance Germany 1,000
2 05-Mar-19 Fantasia Holdings Group Co China 1,000
3 26-Feb-19 Far East Horizon China 440
4 22-Feb-19 Asian Development Bank (ADB) Philippines 300
5 31-Jan-19 Emirates NBD United Arab Emirates 400