China people & markets round-up: Philippines weigh Panda return, MSCI includes more A-shares, roadblock removed for Dhaka Exchange sale
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China people & markets round-up: Philippines weigh Panda return, MSCI includes more A-shares, roadblock removed for Dhaka Exchange sale

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The Republic of Philippines plans a comeback deal in the onshore bond market, the second batch of MSCI A-shares inclusions goes live today, and China’s bourses get a boost as they close in on buying 25% of Dhaka Stock Exchange.

  • The Philippines is hoping to sell its second Panda bond within the next year and a half, Carlos Dominguez, the country’s finance secretary, told media on Tuesday.

    “I don’t want to be absent from any major market,” he said. “The renminbi [issuance was] the first we had, we probably will go back within 12 or 18 months.”

    Rosalia de Leon, a treasurer at the finance ministry, confirmed the general timeline to media this week but said plans could also be affected by market conditions.

    The sovereign sold its debut Panda bond in March, raising Rmb1.46bn ($230.8m). Offshore investors bought 87.7% of that deal, which was six times oversubscribed.

    Meanwhile, another SSA, Papua New Guinea, said it may hit the international bond market with a dollar bond and it is also considering a debut Panda bond, according to a media report.

  • The Shanghai and Shenzhen stock exchanges got one step closer to complete their acquisition of a 25% stake in the Dhaka Stock Exchange (DSE).

    The central bank of Bangladesh approved the DSE to receive payments for the sale from the Chinese consortium this week, according to an August 29 Chinese state media report. The media report noted that it would take another week for DSE to complete the formalities of the transaction with representatives from the two mainland bourses.

    The two exchanges won the bid for this acquisition in May, GlobalCapital Asia, GlobalRMB’s sister publication, reported at the time.

  • MSCI is going ahead with the second batch of A-shares inclusion in its emerging markets (EM) index on Friday. This will bring the weighting of A-shares in the benchmark, tracked by $1.9tr of assets, to 5%. The first step took place on May 31.

    The latest phase of inclusion will bring $900m of inflows into the Chinese stock market, Stephane Loiseau, head of cash equities and global execution services for Asia Pacific at Societe Generale, said in an August 31 note. This figure could reach $3bn if the A-shares’ weighting gets to 10%, he added.

    “Active investors have demonstrated renewed interest in China to tap the liquidity and trading opportunities,” he said. “The number of special segregated accounts [for Stock Connect trading] increased from approximately 4,000 just before June this year to close to 6,000 by the beginning of this month. Chinese equities are under-represented in global investors’ portfolios but will eventually become mainstream for them.”

    Foreign ownership of Chinese stocks rose from 3% to 3.5% in the last six months, analysts at BNP Paribas said in an August 27 report. They projected that a foreign ownership share of 15% would equal investments in A-shares worth $650bn-$700bn.

  • The RMB remained the fifth most active payments currency in July, making up 2.04% of all payments, according to Swift’s RMB tracker. The value of RMB payments went up by 9.91% as other payments currencies lost 2.50% on average.

  • Bloomberg’s inaugural New Economy Forum, originally scheduled to take place in Beijing, will now take place in Singapore in November. In an August 29 press release, the company said its partner for the event, the China Center for International Economic Exchanges, a Chinese think tank, had attempted to move the event to 2019 due “scheduling conflicts”. As a result, the organizer decided to move the event to Singapore and go ahead with the event this year. The change of venue came as China and the US continue to be locked in an exchange of tit-for-tat tariffs, which some media reports noted may have been the reason for the friction between the organizer and the Chinese think tank.

  • The central bank of Vietnam is allowing banks and individuals to use the renminbi to trade with their counterparts from China, according to an August 30 Chinese state media report. The change was announced in an August 28 circular. Commercial banks and branches of foreign banks that are permitted to conduct FX transaction will be covered by this policy. Banks and other businesses trading goods and providing services near the border with China will also be allowed to use the RMB.

  • The China Securities Regulatory Commission has granted a subsidiary of Baidu, the Chinese internet company and search engine provider, the licence to distribute mutual funds, according to an August 13 document on the regulator’s website, which was made public four days later.

    Baidu will need to apply for two other licences with the CSRC before launching its fund distribution services, according to the document. The company should complete the preparation for launching the business in six months, said the CSRC.

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