China market round-up: Green light for RMB bond index inclusion, the PBoC plans Rmb20bn bills sale in Hong Kong, China sees falling industrial profits

In this round-up, Bloomberg Barclays confirmed the upcoming inclusion of Chinese bonds in its indices, the People’s Bank of China will auction CNH bills in mid-February, and industrial profits in China confirmed poor ending for the economy in 2018.

  • By Paolo Danese, Rebecca Feng
  • 01 Feb 2019
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Bloomberg Barclays confirmed on January 31 its plan to include onshore bonds to its Global Aggregate Index, starting April 2019 and gradually increasing the weighting over a period of 20 months.

The Global Aggregate Index represents around $54tr of securities. At the end of the phase-in, Chinese bonds will be the fourth largest currency category in the index, after dollar, euro and yen bonds. Chinese bonds will represent 6.03% of the index at full weighting, according to a Bloomberg Barclays press release.

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The People’s Bank of China will launch a tender for three month and one year offshore renminbi-denominated bills on February 13, the Hong Kong Monetary Authority said on January 31. The PBoC plans to sell Rmb10bn of three month notes and Rmb10bn of one year notes, the notice said.

In a separate filing, Bank of Communications, the issuing and lodging agent for the tender, said that following market enquiries it wanted to clarify that the bills are issued under Reg S and are not available to investors from within the United States.

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China’s industrial profit shrank again in December. Profits decreased 1.9% year-on-year (YoY), compared with a 1.8% decrease in November, according to data published on Monday by the National Bureau of Statistics. For the full year, industrial profits grew 10.3%, slower than the 21% yearly growth in 2017.

“Among major sectors, profit growth decelerated in general equipment manufacturing and electrical machinery manufacturing, and improved in ferrous/nonferrous metal smelting and pressing, utilities and automobile manufacturing,” Maggie Wei, China economist at Goldman Sachs, wrote in a Monday note.

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Shanghai’s customs port saw a 7.3% growth in total foreign trade volume in 2018, reaching Rmb6.41tr, according to data published by the city on Monday.

Exports increased 6% YoY while imports grew by 9.2%. Foreign-invested enterprises accounted for 54.7% of the city’s total imports and exports volume. More than 30% of the city’s imports are high-tech products.

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According to the result of a semi-annual survey conducted by the Bank of England last October, Chinese yuan turnover saw a 17% growth from six months earlier. USDCNY daily turnover reached $73bn, overtaking EURGBP as the seventh most traded currency pair in London.

In a separate January 31 press release, payment infrastructure provider Swift said the renminbi stood its ground as the fifth most used global payment currency in December 2018. The RMB had a 2.07% share of the total, with payments value dropping 2.84% on a monthly basis compared to an overall drop in payments value of 1.97%. When excluding intra-eurozone payments and China-Hong Kong transactions, the RMB was only eighth in the ranking, with a 1.14% share.

  • By Paolo Danese, Rebecca Feng
  • 01 Feb 2019

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