Bank of China (BOC) released its November monthly Credits Investment and Financing Environment Difference Index (CIFED) on December 17. The index tracks the yield differential between offshore and onshore renminbi bonds, with a positive number indicating onshore yields are higher than offshore.
The general index was negative and retained its declining trend, indicating that it is increasingly expensive to raise renminbi offshore. By the end of November, the index stood at minus 138.8, a 47 point decrease from October.
“Although the PBoC has halted open market operations for an entire month, the liquidity condition onshore is still loose,” BOC wrote in the analysis.
Real estate bond yields fell by 30bp, while commercial banks and central bank bonds yields have also declined nearly 10bp.
“As bond yields are declining fast and more credit expansion policies are put into place, bond market sentiment is getting better,” the bank said in the note.
Looking ahead, BOC expects the index to keep declining but with short phases of volatility.
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Value Partners’ Classic Fund has been approved by the China Securities Regulatory Commission (CSRC) as an eligible northbound fund under the Mainland-Hong Kong Mutual Recognition of Funds (MRF) scheme on December 6, according to a company announcement on December 19.
Value Partners appointed Tianhong Asset Management, a Tianjin-based mutual fund manager, as the fund’s master agent. The Classic Fund had $1.04bn of assets under management as of November this year and focuses on the Greater China region.
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Daily CNH trading volume in London averaged £78bn ($98.7bn) in the third quarter, up 12.72% quarter-on-quarter (QoQ) and 23.42% year-on-year (YoY), according to the London RMB Business Quarterly report, published in December by the City of London and the London representative office of the People’s Bank of China.
In the bond market, 22 dim sum bonds with the total size of Rmb4.9bn debuted on the London Stock Exchange in the third quarter, a 36.9% QoQ increase. Some 14 of them, with a total size of Rmb2.77bn, were issued by Australian commercial banks.
The outstanding amount of RMB deposits in London totalled Rmb55.8bn, a 13.86% decline compared with the last quarter, while outstanding RMB loans increased by 2% from the previous quarter.
The cumulative RMB clearing volume in the first three quarters reached Rmb7.7tn, up 19.5% YoY. The average daily volume hit Rmb43.8bn in September.
The cross-border RMB settlement between China and the UK amounted to Rmb288bn in the first nine months of 2018, an increase of 144% YoY.
Outside the Greater China region, the UK remains the country with the largest share of RMB payments.
The report also noted that that in the third quarter, the offshore renminbi (CNH) became a tad weaker than onshore renminbi (CNY) and the FX spot spread between CNH and CNY turned from negative to positive.
The UK retained its first place in offshore RMB FX transactions, taking up 38.64% of global RMB FX trading volume, according to the report.