China market round-up: Philippines plans for second Panda, Chinese investors have the strongest home bias, foreign firms join China credit monitoring system

In this round-up, China and the Philippines sign Memorandum of Understanding (MoU) for a new Panda issuance, survey finds that 64% of Chinese investors choose to invest domestically rather than overseas, and foreign firms are getting approvals to help China build a nationwide credit information monitoring system.

  • By Rebecca Feng
  • 23 Nov 2018
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The Philippines is planning to issue a second Panda bond next year, following an agreement between the leaders of the two countries achieved during a meeting on November 20. China and the Philippines also signed 29 other bilateral agreements on trade and investment.

Chen Siqing, president of Bank of China, and Carlos Dominguez III, head of the Pilippines' ministry of finance, signed a MoU laying out plans to issue a multi-tranche Rmb6bn Panda bond in 2019. The deal will be more than four times bigger than the sovereign’s last Panda, a Rmb1.46bn three year note issued this March,

Additionally, the Philippines department of finance (DoF) signed three economic agreements, which will allow China to help build key infrastructure projects in Mindanao, a group of islands in the southern Philippines, according to a statement by the DoF on November 21.

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Hong Kong investors have the second highest level of home bias in the ASEAN region, after mainland China, according to a November 21 investment survey conducted by Legg Mason Global Asset Management.

52% of the Hong Kong investors believe that Hong Kong offers the strongest investment opportunities over the coming 12 months. Meanwhile, investors from mainland China have the highest level of home bias, with 62% confident in domestic equities.

Chinese investors also have the strongest home bias in terms of investment destinations. 64% said they would invest in China rather than overseas, but this could be related to the overseas investment restrictions they face, according to the report.

On a global scale, while the US is still viewed as offering the best investment opportunities in the coming year, China is ranked second with 35% of respondents optimistic about the country.

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US credit information servicer Dun & Bradstreet Corp registered with PBoC in 2017 to be part of a scheme to build a nationwide credit information monitoring system, local media reported on November 22.

China has yet to open up the personal credit information service to overseas companies. The existing rating scheme, which is based on assessing the debt repayment ability of businesses and individuals, is still exclusively the responsibility of China’s own Baihang Credit Scoring, jointly founded by eight domestic credit firms.

Experian Credit Service Beijing branch, the China subsidiary of a wholly British-owned company, Experian, has already registered with PBoC to be part of the scheme and the central bank has finished the review of its application in September, local media reported.

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The Shanghai Stock Exchange (SSE) held the eighth Trading China Conference for Foreign Investors on November 8, according to a November 20 release. The conference is aimed to educate foreign investors on the Chinese A-shares market, according to its organisers.

International investors’ involvement in the A-shares market is significant for the Chinese capital market to mature, Jiang Feng, president of SSE, said in the opening speech.

Jiang also promised to accelerate China’s opening up process. The SSE will keep promoting the connectivity mechanism of cross-border capital markets, cooperate with Belt and Road (BRI) markets, and strengthen cooperation mechanism with overseas exchanges, he said.

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China and Russia are drafting a plan to use their own currencies, instead of the dollar, in bilateral and international trades, local media reported.  

The cross-border payment system was first mentioned during Russian prime minister Dmitry Medvedev’s visit to China earlier in November.

The discussions also included the launch of a cross-border system for direct payment of trade invoices in renminbi and the rouble. The new system would allow China and Russia to avoid using Swift, the most popular global payment platform, and circumvent US sanctions.

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Total assets in Chinese banks grew 6.96% YoY in Q3, down just slightly from the 7% in Q2, the 7.36% in Q1 and 8.68% from Q4 2017, according to the Q3 results published by CBRC on Monday.

Despite encouragement from the government, large commercials banks are still underserving small and micro enterprises.

In total, large commercial banks gave out Rmb7.234tn to small and micro enterprises in Q3, 1.1% down from Q2 and 3.0% down from Q1. In contrast, foreign-owned banks are increasing their lending to these enterprises. In total, they lent out Rmb253.2bn in Q3, a 1.7% increase from Q2 and 5.2% increase from Q1.

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Risk aversion toward emerging markets, fast US rates hikes, and global trade tension are the three major short-term risks to emerging East Asia’s bond markets, according to a report by Asian Development Bank (ADB) published on November 20.

The rapid growth of private debt and depreciation of regional currencies also exacerbated capital outflows and tighter liquidity conditions, the report added.

ADB also highlighted the expansion of the local currency bond market in Hong Kong during the third quarter. The market, at $250bn as of the end of Q3, expanded 1.4% from the previous quarter and 3.6% year-over-year (YoY).

“The growth was due mostly to an increase in outstanding corporate bonds, which expanded 3.9% quarterly and yearly to $102bn, owing to the expectation of higher interest rates moving forward,” the report read.

Meanwhile, the government bond market contracted 0.4% to $147bn quarterly, due to slowing issuance growth and maturing notes and bonds.

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Germany's Aareal Bank is closing its Shanghai branch after ten years of operation since September 2008, according to a statement by the China Banking Regulatory Commission (CBRC) published on November 21. CBRC approved the closure application, submitted by Hermann Merkens, chairman of the board, and Christof Winkelmann, a member of the board, on November 11.


  • By Rebecca Feng
  • 23 Nov 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 15.31
2 Industrial and Commercial Bank of China (ICBC) 12.35
3 CITIC Securities 8.92
4 Agricultural Bank of China (ABC) 7.60
5 China CITIC Bank Corp 6.76

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 06-Dec-18 China Gas Holdings China 1,300
2 27-Nov-18 Daimler Germany 4,000
3 26-Nov-18 Beijing Enterprises Clean Energy China 2,800
4 15-Nov-18 Sun Hung Kai Properties Hong Kong 1,200
5 12-Nov-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 30.97
2 HSBC 18.82
3 Societe Generale 3.85
4 Bank of China (BOC) 3.68
5 Bank of Taiwan 3.30

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 03-Dec-18 Huzhou Communications Investment Group China 500
2 22-Nov-18 Bank of China Tokyo Branch (BOC Tokyo) China 800
3 15-Nov-18 RusHydro Russian Federation 1,500
4 13-Nov-18 Bank of China (Hong Kong) (BOCHK) China 1,000
5 19-Sep-18 Agricultural Development Bank of China (ADBC) China 1,200