China people & markets round-up: Surprise uptick in FX reserves, record month for SGX’s RMB futures, China sells more to Belt and Road

China’s foreign exchange reserves grow in July, renminbi derivatives in Singapore hit a new high as trade war escalates, official data shows a pick-up in exports from China to Belt and Road countries.

  • By Noah Sin
  • 10 Aug 2018
Email a colleague
Request a PDF

  • China FX reserves grew by $5.8bn to $3.1179tr in July, marking a 0.19% month-on-month growth, according to an August 7 statement by the State Administration of Foreign Exchange (Safe).
    The uptick surprised some analysts. The rise suggested that the People’s Bank of China did not use the reserves to prop up the RMB exchange rate last month, Julian Evans-Pritchard, senior China economist at Capital Economics, who expected the reserves to shrink mildly, wrote in a note on Tuesday.
    This does not mean the PBoC did not, or will not, intervene in the exchange rate, said the analyst.
    “The PBoC has other tools at its disposal aside from its FX reserves to lean against depreciation pressure, and there were signs in both the daily renminbi fixing rates and in the currency’s intraday price action of indirect intervention last month,” he said. “But the bigger picture is that the PBoC showed an unusual willingness to tolerate rapid renminbi depreciation in July.”
  • The Singapore Exchange’s CNH futures broke the record in monthly trading volume, as market participants sought to hedge risks deriving from the US-China trade tensions, the exchange has said.
    The product’s trading volume stood at 614,852 contracts, up 45% month-on-month and up 308% year-on-year, according to statistics released by SGX on August 8. That amounted to $61.5bn in value, a monthly turnover record, bringing the year-to-date volume to $255bn, the exchange said in a report on Wednesday. Overnight trading volume reached $1.83bn on August, a new record, as news of additional trade tariffs from the US emerged, said the exchange.
    Meanwhile, the FTSE China A50 Index Futures was the most active derivatives contract on SGX. The trading volume of the product was 7.32m contracts, up 13% month-on-month and 32% year-on-year.
    Hong Kong Exchanges and Clearing (HKEX)’s CNH futures had its largest daily volume on Monday, with 22,105 contracts traded, according to HKEX’s data. After-hours turnover also broke the record last Friday, standing at 11,747 contracts, compared with the old record of 6,049 contracts which was set on March 29. The product’s year-to-date volume hit one million contracts for the first time last Friday.
  • China had a current account surplus of $5.8bn in the second quarter, according to figures released by Safe on August 6. But the country recorded a current deficit of $28.3bn in the first half, the first mid-year deficit in 20 years, local media pointed out this week. In the first quarter, China experienced a quarterly account deficit of $34.1bn, CEIC data shows.
    China’s exports of goods amounted to Rmb8.89tr ($1.3tr) in the first seven months of the year, up 5% year-on-year, according to figures released by the General Administration of Customs on Wednesday. Imports stood at Rmb7.83tr in the same period, up 12.9%. Exports to Belt and Road countries came to Rmb4.57tr, up 11.3% year-on-year, and made up 27.3% of the country’s export in this period.
  • Net foreign investment into domestic Chinese financial institutions amounted to Rmb881m in the second quarter, according to figures published by Safe on Thursday. Foreign investors put in $3.47bn and took out $2.59bn. Meanwhile, net overseas direct investment by Chinese financial institutions came to $2.13bn in the same period.
  • Industrial and Commercial Bank of China has launched a new branch in Zurich, the bank said in an August 9 statement. The bank said the new branch, which opened for business in June, will help facilitate trade and co-operation between China and Europe and Belt and Road countries.
    China Construction Bank Zurich is the RMB clearing bank for Switzerland. The country has Rmb50bn of RMB qualified foreign institutional investor (RQFII) quotas, with only Rmb5bn allocated to investors, according to GlobalRMB data. The PBoC has a Rmb150bn swap line with the Swiss central bank.

  • 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