Hong Kong’s Securities and Futures Commission (SFC) has entered an agreement with the China Securities Regulatory Commission (CSRC) to enhance the exchange of investor information on the Stock Connect southbound trading channels, according to a Friday afternoon press release. The new rules are set to become effective by the end of Q1 2019.
An investor ID model for northbound trading has already been in place since September 26 this year.
Under the investor ID model, participants of the scheme are required to assign a unique number to each of their northbound trading clients, which is linked to client identification data including the client’s name, identity document issuing country, ID type and ID number.
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Inbound FDI dropped 27.6% YoY to $13.6bn in November, the Ministry of Commerce (MoC) announced during a press conference on Thursday.
FDI had already been sliding in the two months before November. Spokesperson Gao Feng said the decline was due to a high base last year.
For the first 11 months of the year, FDI in the manufacturing sector totalled Rmb241bn ($34.9bn), a 16% increase YoY. For high-tech manufacturing, medical equipment manufacturing, and computer devices manufacturing, FDI was up 30.2%, 132.5%, and 112.7% YoY respectively.
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China's MoF confirmed on Friday that it would reduce import tariffs on 211 auto products from the US for three months starting January 1. The temporary suspension was to implement the consensus reached between Chinese president Xi Jinping and US president Donald Trump at the G20 summit, according to the statement.
Beijing imposed a 40% tariff on US car imports in July in response to Washington raising tariffs on Chinese goods.
As a result, a 25% import tariff on a total of $66bn auto products will be suspended, as well as a separate 5% tariff on another $60bn worth of auto imports.
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Domestic investors made direct and nonfinancial investments in 157 countries and 5,213 offshore enterprises worth a total of $104.5bn in the first 11 months this year, according to a Friday statement by China's Ministry of Commerce.
Newly-signed and completed offshore contracts of foreign projects reached $183.5bn and $138bn, respectively. Among these projects, those that are more than $50m in value dominated, took up 84.1% of overall new contract volume.
Chinese enterprises invested a total of $13bn in 56 Belt and Road Initiative (BRI) countries. The value of new contracts in BRI countries totalled $90.4bn, accounting for 48.8% of overall new contract value. Meanwhile, completed offshore contracts in BRI countries reached $73.7bn, accounting for 53.4% of total volume.
The majority of outbound investments went to real estate rentals and commercial services, manufacturing, retailing, and mining industries. The first category took up 38.2% of total investments. There were no new investments in real estate, sports, or entertainment industries.
Lastly, 7,882 new nonfinancial institutional investors and 42 financial ones were registered or approved to invest offshore.
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By the end of October, a total of 1,120 domestic enterprises had listed on Hong Kong Exchange and Clearing (HKEX). Together they accounted for 67.3% of the total value of the Hong Kong stock market, according to a report published by the State Administration of Foreign Exchange (Safe) celebrating the 40th year of China’s market reform efforts.
By the end of October, 15 domestic enterprises have successfully listed on the HKEX using the cornerstone investor scheme. Introduced by Safe in 2016, the scheme allows eligible mainland investors to purchase stocks in mainland enterprises’ IPOs in Hong Kong as cornerstone investors.
As of the same month, 152 institutions have gained Qualified Domestic Institutional Investor (QDII) licences, with a total assigned quota of $103.2bn. The total available QDII quota is set at $180bn.
The total quota available under the Qualified Foreign Institutional Investors (QFII) scheme was lifted to $150bn and the available quota under the RMB QFII (RQFII) scheme reached Rmb1.94tn. As of the end of October, there were a total of 286 QFII licence holders with quotas worth $100.3bn, as well as 203 RQFII licensees holding Rmb640.2bn in quotas.
Northbound and southbound investment under the Shanghai-Hong Kong Stock Connect reached Rmb330.6bn and HK$623.2bn respectively in the first ten months this year. Under the Shenzhen-Hong Kong channel, northbound investment and southbound investment totalled Rmb248.1bn and HK$187.8bn ($24.2bn) respectively.
Bond Connect saw a cumulative net portfolio inflow of Rmb318.3bn in the year up to the end of October.
Total bond inflows were nearly $100bn in 2018 so far, according to a report by the Institute of International Finance on December 15.
The same report noted that central bank reserve managers had added about $70bn worth of RMB-denominated assets to their reserves, compared to sales of about $30bn for dollar assets.
That being said, this year foreign investor demand for bonds is shifting from China to other emerging markets, according to the report.
“In recent months foreign investors have eschewed Chinese corporate and sovereign bonds, preferring other EM bonds – which are priced more attractively in the wake of the 2018 selloff - amid concerns over the RMB's future path, softening activity in China, higher levels of Chinese debt, and trade tensions,” according to Paul Della Guardia, financial economist at IIF and author of the report.
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Retail sales growth slowed to 8.1% YoY in November, down from October’s 8.6% YoY growth. Industrial production growth decelerated as well to 5.4% YoY, down from 5.9% in October. Investment growth slightly increased to 5.9% YoY from 5.7% in October, according to data published by the National Bureau of Statistics on Friday morning.
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John Bolton, the US national security advisor, rolled out a new strategy, “Prosper Africa”, to support American investment across Africa on Thursday during a speech at the Heritage Foundation, an American conservative public policy think tank based in Washington DC. The initiative is widely perceived as a challenge to Chinese investment in the region, largely conducted under the Belt and Road Initiative.
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UBS is close to finalizing the increase in its stake in the onshore joint venture UBS Securities (UBSS) to 51%, the firm said in an internal memo on December 17 seen by GlobalRMB. In the same memo, the firm announced the appointment of Sun Lijun and Liu Wencheng as joint heads of corporate client solutions (CCS) in UBSS.
The pair will report to Eugene Qian, head of UBSS. Sun rejoined UBSS in 2018 from Credit Suisse’s onshore JV and will take up the role of head of UBSS's Shenzhen branch. Liu joined UBSS in 2007 and was previously head of the financial institutions group. Liu will continue to be the head of UBSS's CCS Shanghai branch.
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Citi is pulling out of its China securities joint venture. It gave its partner notice at the end of last week.
The US bank has been in negotiations with Orient Securities, a Chinese brokerage it partnered with in 2012. But after failing to come to an agreement with the Chinese firm over sharing a sales and trading licence, Citi alerted Orient on December 14 that it was going to exit the joint venture.
The US bank is still in discussions with potential partners. It wants the new JV to be operational in 2020, according to a source.