China policy round-up: SFC shelves ETF Connect, Chinese VCs to receive more tax cuts, China-HK expand economic cooperation

In this round up, Hong Kong's Securities and Futures Commission put an ETF link on hold, venture capital funds will get more tax cuts, and Hong Kong signed up to the fourth closer economic partnership agreement with the Mainland.

  • By Rebecca Feng
  • 14 Dec 2018
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Hong Kong's Securities and Futures Commission (SFC) postponed the launch of the already-delayed ETF Connect scheme, local media reported on Thursday.

While the regulators said they were not scrapping the scheme, they did not give a specific timeline for the project either. Instead, the SFC will focus on cross-listings of exchange-traded funds (ETFs).

The regulators cited “technical issues”, such as different trading and settlement methods between Hong Kong and the mainland, as the primary cause for the delay of ETF Connect, as the scheme was known. 

A spokesperson at SFC told GlobalRMB that unlike the originally envisioned ETF Connect scheme, the new cross-listing scheme will still require individual ETF funds to apply for separate approvals from both the primary listing and the secondary listing exchanges.

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The government will provide tax benefits to venture capital (VC) funds, effective for five years from January 1 next year, premier Li Keqiang announced during the state council meeting on Wednesday.

The current rules, which allow VC funds to deduct 70% of their investments in seed-stage or hi-tech startups from their taxable income, will be kept.

The new regulation will allow individual VC partners to either choose to pay personal income taxes at a tax rate of 20% or pay taxes based on business earnings at progressive rates from 5% to 35%.

Through these changes, the Chinese government hopes to promote industrial investments, innovation, and lower the unemployment rate, according to the announcement.

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Mainland China and Hong Kong jointly established the mainland-Hong Kong economic and trade collaboration committee on December 14.

During the committee’s first meeting, the Ministry of Commerce (MoC) and Hong Kong's Financial Secretary signed the fourth and newest closer economic partnership agreement (CEPA) agreement, effective from January 1 next year.

The agreement complements the existing three CEPA agreements and helps Hong Kong cement its position as a centre for international trade and shipping.

The new agreement clarified the specific rules for defining the origins for certain products and set up trade facilitation measures in the Greater Guangdong-Hong Kong-Macao Bay Area.

The committee also discussed ways in which Hong Kong can participate in the Belt and Road Initiative  (BRI), according to the official MoC statement. China will assist in providing more investment opportunities for Hong Kong enterprises in BRI countries.

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China Exchanges Services Company (CESC) published the 2017 report on BRI participation by listed companies. The report aims to reflect the stock performance of listed companies actively participating in BRI. 

The number of companies participating in BRI rose to 667 in 2017 from 594 in 2016, according to the report. Some 60% of the participants said they would increase the number of BRI related business plans in the next three years. 

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Xie Duo became the chairman of Silk Road Fund, according to a December 14 announcement by the fund.

The four-year-old Silk Road Fund is dedicated to supporting infrastructure, resources and energy development, as well as industrial and financial cooperation in BRI countries.

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China and Ukraine renewed a Rmb15bn or 62bn of Ukrainian hryvnia ($2.18bn) currency swap deal on Monday, according to a People’s Bank of China (PBoC) statement. The swap agreement will be valid for three years and is extendable.

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PBoC is restructuring itself to better address three primary areas it has identified as important – the foreign exchange market, institutions of systemic importance, and countercyclical adjustments, local media reported.

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The China Securities Regulatory Commission hosted the China Capital Market and Global Asset Allocation forum in Beijing on Thursday, according to a statement released on Thursday.

During the meeting, deputy chairman Li Chao promised to improve the Stock Connect, QFII, and RQFII schemes. Li also vowed to strengthen cross-border securities market supervision and welcome more overseas long-term investments into the Chinese capital market.


  • By Rebecca Feng
  • 14 Dec 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 14.44
2 Industrial and Commercial Bank of China (ICBC) 11.65
3 Bank of China (BOC) 10.33
4 CITIC Securities 8.41
5 Agricultural Bank of China (ABC) 7.17

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 10-Jan-19 Beijing Enterprises Water Group China 2,000
2 18-Dec-18 Bank of China Group Investment China 2,000
3 17-Dec-18 Hungary Hungary 2,000
4 06-Dec-18 China Gas Holdings China 1,300
5 27-Nov-18 Daimler Germany 4,000

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