China market round-up: StanChart RMB index rises, State Street joins RQFII scheme, IHS Market launches onshore bond indices

Standard Chartered’s RMB internationalisation index hit a nearly two-year high, State Street entered the RMB qualified foreign institutional with a splash, and index provider IHS Markit partnered with a Chinese clearinghouse for a new set of bond indices.

  • By Paolo Danese
  • 12 Oct 2018
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Standard Chartered's Renminbi Globalisation Index saw its fourth monthly increase and reached 1,916 points, the highest level in 19 months, the bank said on October 11. Kelvin Lau, senior economist for Greater China at StanChart, said higher FX turnover and resilient cross-border payments drove the index 3.3.% higher on a monthly basis, while the US-China trade war will continue to weigh on the index’s prospects.

"Further improvement from here could prove difficult, however," wrote Lau. "FX turnover could decline again as USD-CNY approaches the 7.0 psychological level that the authorities look to defend. The overall China trade pie could also start to shrink as US-China trade tensions intensify, hurting Renminbi trade settlement, even if its share of total trade stays resilient."

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The Shanghai International Energy Exchange (INE) has opened to foreign institutions to become market makers for the crude oil futures market, INE said in a statement on October 11. The applicants will, among other things, need to have net assets of no less than Rmb50m, experience as market makers, and no record of severe violations of laws and regulations for the past three years.

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China further expanded its RQFII scheme in September, with six new entities added to the list, bringing the programme to a total size of Rmb640.2bn, according to data from the State Administration of Foreign Exchange. Four out of the six entities belonged to global financial group State Street, with the entities located across Ireland, the UK and the US. The quota to State Street Global Advisors Ireland was also the first quota in the jurisdiction, nearly two years after Ireland's entry in the scheme.

The combined quotas for State Street are worth Rmb14.7bn. Two new entrants joined the scheme from Hong Kong, BOB Scotia International Asset Management Company and Foresee Global Asset Management (HK), both local asset managers. The programme has grown increasingly diversified from a geographical perspective, with Hong Kong-linked quotas now at Rmb315.1bn, or just under half of the total allocated quotas, according to GlobalRMB data. Singapore and South Korea remain the next largest RQFII jurisdictions, with Rmb74.7bn and Rmb72.9bn, respectively. The US, while only added to the RQFII scheme in June 2016, already stands as the sixth largest jurisdiction with Rmb29.8bn in allocated quotas.

The largest institutions in the scheme are BlackRock, with Rmb54.1bn in global quotas, CSOP asset management, with Rmb46.1bn through its Hong Kong entity, and Vanguard, with Rmb30bn through Australia.

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Index provider IHS Markit partnered up with the China Central Depository and Clearing (CCDC, also known as Chinabond), the onshore clearinghouse, to launch a new set of bond indices, IHS Markit said on October 12.

The new bonds will be compliant with the latest IOSCO and European Market Regulation standards and be based on Chinabond pricing data, the firm said. The first set of the new indices are the iBoxx Chinabond Government & Policy Banks Bond Indices. Government and policy bank bonds represent a quarter of the entire onshore market, IHS noted.

“These are the first globally-branded onshore Renminbi bond indices, combining iBoxx methodologies with [CCDC] bond pricing to deliver authoritative performance indicators for investors across the world,” said Bai Weiqun, chief supervisor of CCDC. “As more international investors see opportunities in China, there is a growing need for new and reliable benchmarks, and we are delighted to provide fund managers with these valuable tools for accessing one of the world’s fastest growing markets.”

IHS Markit has $6 billion in fixed income exchange-traded funds that are benchmarked to iBoxx indices targeting the region.

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There were 445 international institutional investors active on Bond Connect as of the end of September, according to a Bond Connect Company report published on October 8. Global asset managers made up 64% of the total, with banks at 18% and securities firms at 7%. Half of these investors were based in Hong Kong. Trading volume for September was Rmb64.8bn, with the most common investments being policy bonds, certificates of deposits, and Treasury bonds.

Total foreign holdings of RMB bonds hit Rmb1.68tr in the same month, up 4.4% in the month and 46.7% since the start of the year, according to BCCL data.

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The USDCNH futures traded on the Singapore stock exchange (SGX) saw total volume of 469,757 in September, down 27% on a monthly basis but up 68%from a year earlier, the exchange said on October 8. The FTSE China A50 Index Futures, meanwhile, saw 7.66m contracts traded, down 11% in the month but up 47% from September 2017.


  • By Paolo Danese
  • 12 Oct 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 17.33
2 Industrial and Commercial Bank of China (ICBC) 14.45
3 CITIC Securities 10.36
4 Agricultural Bank of China (ABC) 9.42
5 China CITIC Bank Corp 8.48

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 15-Oct-18 China Power International Development China 2,000
2 11-Oct-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,200
3 28-Sep-18 Trafigura Singapore 700
4 17-Sep-18 The Wharf (Holdings) Hong Kong 2,000
5 10-Sep-18 China Gas Holdings China 1,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 33.31
2 HSBC 20.53
3 Societe Generale 4.21
4 Bank of Taiwan 3.60
4 Cathay United Bank 3.60

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 19-Sep-18 Agricultural Development Bank of China (ADBC) China 1,200
2 17-Sep-18 Hitachi Capital (UK) United Kingdom 600
3 13-Sep-18 CIFI Holdings China 1,000
4 05-Sep-18 Daimler Germany 1,000
5 03-Sep-18 First Abu Dhabi Bank PJSC United Arab Emirates 650