The week in renminbi: US offers 90-day tariffs truce, Bloomberg obtains broader Chinese interbank bond market access, UBS gets approval for majority control of China JV

In this round-up, Donald Trump and Xi Jinping agreed to hold back from new tariffs for 90 days, Bloomberg received the green light from China Foreign Exchange Trade System (Cfets) to become the new trading platform for Bond Connect and CIBM Direct, and UBS obtained approval to acquire a majority share of onshore joint venture UBS Securities.

  • By Rebecca Feng
  • 03 Dec 2018
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After a two-and-a-half-hour working dinner, US president Trump and Chinese president Xi agreed not to raise tariffs further over the coming 90 days. In addition, on January 1, 2019, the US will not raise the existing 10% tariffs on $200bn goods to 25%, according to the White House’s official statement on December 1.

Meanwhile, China will agree to purchase “a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product" from the US to reduce the trade surplus, according to the statement. China has also agreed to start purchasing agricultural products from US farmers immediately.

The two leaders have also agreed to immediately begin negotiations in the areas of forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the statement.

If at the end of the 90-day period the two parties are unable to reach an agreement, the 10% tariffs will be increased to 25%. The 90-day time limit was not mentioned in the Chinese official statement released on December 2.

“Some may believe that a 90-day halt simply kicks the can down the road without providing any clarity,” Premia Partners, an Asia ETF specialist, wrote in a December 3 note. “That may in fact be the case if the trade war goal is not about balancing the trade deficit but about maintaining US dominance globally.”

Both parties are working to eliminate all tariffs introduced so far, according to the Chinese statement, a detail that was not mentioned in the US release.


Bloomberg and Cfets will set up a trading channel to allow offshore institutional investors to trade bonds in the interbank market or request quotations from domestic market-making institutions, according to a press release last Friday afternoon.

The approval from Cfets came a day before Trump and Xi’s meeting in Buenos Aires. 

The plan will be finalised in the coming weeks, according to the press release. Both CIBM Direct and Bond Connect schemes will be available via Bloomberg terminals.

The new trade ticket communication service will be for offshore participants and their chosen onshore banks to communicate trade details via Bloomberg's voice confirmation feature.

According to the statement from Cfets, overseas investors using CIBM Direct may send trading instructions from a Bloomberg terminal to Cfets, and agent banks may confirm trading instructions on the Cfets system. Overseas investors using Bond Connect may send requests for quotes through Bloomberg terminals to onshore market makers.

In the same statement, Cfets also disclosed that foreign investment in the Chinese bond market so far this year, in terms of average daily trading volume, reached Rmb13bn ($1.88bn), a 45% year-on-year growth.


UBS obtained approval from the China Securities Regulatory Commission (CSRC) on November 30 to increase its ownership of UBS Securities, its onshore JV, to 51%. As of now, the Swiss bank owns 24.99% of the JV.

UBS is acquiring from China Guodian Capital Holdings and Cofco their 12.01% and 14% stakes in UBS Securities respectively, according to a UBS press release. After the acquisition, UBS will become the first foreign bank to gain majority control of an existing securities joint venture in China. HSBC was given majority control of a new firm, Qianhai Securities, when its own joint venture was approved last year.


China’s manufacturing purchasing managers’ index (PMI) declined in November to 50, 0.2 points lower than October. That was the lowest level since July 2016, according to official data from the National Bureau of Statistics last Friday. Official non-manufacturing PMI scored 53.4, 0.5 points lower from October. The production index edged down 0.1 points to 51.9 and the new orders index declined by 0.4 points to 50.4.

“We believe things will get worse in the spring of 2019 when the effect of front-loading reverses after additional tariff hikes come into effect and as the property market cools further,” Ting Lu, analyst at Nomura, wrote in a November 30 note.

The construction sector sub-index fell to 59.3 from 63.9 in October, while the service sector sub-index rebounded to 52.4 from 52.1.

Maggie Wei, a China economist at Goldman Sachs, attributed the service PMI rebound to the November 11 online shopping festival, which might have pushed up demand for postal and IT services.


Renminbi deposits in Hong Kong rose by 2.8% to Rmb617bn at the end of October, according to Hong Kong Monetary Authority data released on November 30.

The total remittance of renminbi for cross-border trade settlement amounted to Rmb336bn in October, a slight decrease from Rmb349bn in September.

  • By Rebecca Feng
  • 03 Dec 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 21.17
2 China Merchants Securities Co 17.84
3 Industrial and Commercial Bank of China (ICBC) 14.86
4 Agricultural Bank of China (ABC) 10.81
5 China Securities 9.01

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 17-May-19 Trafigura The Netherlands 540
2 16-May-19 CITIC Pacific China 1,000
3 15-May-19 Republic of the Philippines Philippines 2,500
4 29-Apr-19 Semiconductor Manufacturing International Corp (SMIC) China 1,000
5 29-Apr-19 Semiconductor Manufacturing International Corp (SMIC) China 500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 25.05
2 Credit Agricole 7.04
2 HSBC 7.04
4 Bank of China (Hong Kong) (BOCHK) 6.90
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.90

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
2 16-Apr-19 ICBC Singapore Branch China 1,000
3 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
4 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500
5 13-Mar-19 Daimler International Finance Germany 1,000