China market round-up: FX reserves climb in December, renminbi globalisation index dips in November, domestic CPI inflation moderates

In this round-up, China’s foreign exchange reserves rebounded slightly for the second month in a row, Standard Chartered’s index for international RMB usage fell again, and China's consumer price index (CPI) inflation decelerated at the close of 2018.

  • By Rebecca Feng
  • 11 Jan 2019
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China’s FX reserve climbed in December for the second consecutive month to $3.07tr, an $11bn increase from the month before, according to January 7 data from the State Administration of Foreign Exchange (Safe).

Safe attributed the small rise to valuation effects including a weaker dollar and rising bond prices in major countries.


The Standard Chartered Renminbi Globalisation Index (RGI), the bank’s measure of international renminbi usage, fell for a second month in November from 1965 points in October to 1920 points, according to a January 9 note.

“Heightened worries about China’s growth, the US-China trade dispute and a weak currency were also bound to spill over to actual renminbi usage, and not just in the form of weaker cross-border payments,” Kelvin Lau, senior economist for Greater China at the bank, wrote in the report. “All five of our RGI components fell in November for the first time since February 2017.”

On the brighter side, renminbi-denominated trade settlement rebounded to 12.6% of total China trade from 11.8% in October. Onshore bond holdings by foreign investors also rose Rmb84bn in December after two drops in October and November.

The bank is expecting a more positive 2019 for the index. Thanks to the easing stance of regulators, the expectation of moderated US rate hikes, and limited onshore renminbi depreciation, the general sentiment of the market has stabilised, according to the report. Standard Chartered expected the USDCNY exchange rate to stay below 7.0 in 2019 and end the year at 6.65.


China's CPI inflation moderated to 1.9% YoY in December from 2.2% in November. Meanwhile, producer price index (PPI) inflation decelerated further to 0.9% YoY from 2.7% YoY in November, the slowest pace of growth in two years, data released by the National Bureau of Statistics on January 10 showed.

 “Overall, CPI inflation appears likely to be mild in the near term, providing a relatively benign environment for the government's efforts to stabilize growth,” Li Zhennan, China economist at Goldman Sachs, wrote in a January 10 note.


The World Bank lowered its GDP growth forecast for China by 0.1% to 6.2% on Tuesday, due to softening trade and investment, trade tensions and tightening control of financial risks.


Trading volume in Singapore Exchange (SGX) USDCNH futures reached 654,125 contracts in December, up 212% YoY and up 14% month-on-month, according to monthly data from the exchange.

The popular FTSE China A50 index futures trading volume hit 7.23m contracts in the same month, down 5% on a monthly basis and up 14% YoY.

On January 11, SGX also announced it had completed the world’s first USDCNH Flexible FX futures trade (CNH FlexC FX Futures).

The CNH FlexC FX Futures solution, first offered last August, allows participants to trade FX futures in an over-the-counter manner with privately negotiated expiration dates and clear the trades on SGX platform. Bank of China (Singapore) and Industrial and Commercial Bank of China (Singapore) executed two CNH FlexC FX futurised swap trades with a total notional value of $8m.

Futurised swaps use futures contracts to trade as replacements of standardised swaps, hedging risks like swaps do without being subject to swap transactions regulations.


In December, Changsheng Fund Management (HK) was granted qualified foreign institutional investor (QFII) status with a quota of $500m. The total QFII quota reached $101.06bn by the end of 2018. 

The outstanding amount of the RMB QFII program was Rmb646.7bn as of December 29. Yinhua International Capital Management in Hong Kong and Sumitomo Mitsui Banking Corporation in Japan, were the newest recipients of quotas, with Rmb1bn and Rmb3bn granted. The latter quota is the first for any investor out of Japan.

No new Qualified Domestic Institutional Investor quota was handed out in December.

In November, net inflows to Chinese onshore funds from Hong Kong investors under the Mutual Recognition of Funds scheme reached Rmb470.5m, a Rmb17m increase from October. Meanwhile, net sales of Hong Kong funds in the mainland stood at Rmb9.14bn, a decrease of Rmb173.5m from the previous month.

  • By Rebecca Feng
  • 11 Jan 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 21.85
2 China Merchants Securities Co 14.67
3 Industrial and Commercial Bank of China (ICBC) 14.44
4 Agricultural Bank of China (ABC) 8.89
5 China Securities 7.41

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 10-Jul-19 BMW Finance N.V. Germany 3,500
2 20-Jun-19 Maybank Malaysia 2,000
3 30-May-19 Portugal Portugal 2,000
4 17-May-19 Trafigura The Netherlands 540
5 16-May-19 CITIC Pacific China 1,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 32.50
2 Credit Agricole 6.34
2 HSBC 6.34
4 Bank of China (Hong Kong) (BOCHK) 6.22
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.22

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-Jul-19 CIFI Holdings China 1,600
2 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
3 16-Apr-19 ICBC Singapore Branch China 1,000
4 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
5 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500