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The week in renminbi: BRI summit yields 283 agreements, industrial profits rebound, capital outflows continue

By Rebecca Feng
29 Apr 2019

In this round up, the Belt and Road Summit 2019 wrapped up on Saturday with numerous deals, monthly industrial profit increased sharply in March and China reported a small capital outflow.

China wrapped up the second Belt and Road Summit in Beijing on Saturday.

The CEO conference during the summit brought in a total of $64bn deals, Chinese president Xi Jinping said during a Saturday press conference. As for the summit as a whole, a total of 283 agreements were signed, according to the complete list of agreements provided by the China’s Foreign Ministry.

Singapore’s United Overseas Bank (UOB), the Singapore Exchange and the China Chamber of International Commerce signed a memorandum of understanding to promote Singapore as a launchpad for Chinese enterprises hoping to expand in the ASEAN region, according to a UOB press release on Sunday.

After underwriting Maybank’s first Panda bond in 2017, the China Development Bank (CDB) agreed to keep working with the issuer and pin down the timing for its second Panda bond offering, according to a report by Shanghai Securities News, a state-owned media outlet. The deal will have CDB as lead underwriter and HSBC, Industrial and Commercial Bank of China (ICBC) and BNP Paribas as joint lead underwriters.

ICBC signed an MoU with the Austrian Treasury to be the lead underwriter of the country’s planned Panda bond. Bank of China and HSBC will be joint lead underwriters on the deal, according to a press release by ICBC sent out on Monday.

During a Sunday meeting between the Chinese premier Li Keqiang and the Austrian chancellor, Sebastian Kurz, the two talked about deepening research into pandas (the animals rather than the bonds!) and together developing the winter sports industry.

In other news, BOC will establish a branch in Papua New Guinea.


China’s industrial profit rebounded 13.9% year-on-year (YoY) in March, a big improvement from the contraction of 14% seen in February, according to data released by the National Bureau of Statistics on Saturday.

“The rebound of industrial profit data was in line with positive data released recently, partially supported by the seasonal effect,” UOB said in a Monday note. “The industrial profit may imply a recovery of investment in manufacturing sector in the coming months.”

Profit growth among automobile manufacturers turned positive after being negative in January and February. The sector’s profit grew 1% YoY in March after declining 42% in January and February.

“We expect overall GDP growth to gradually decelerate in the rest of the year,” Maggie Wei, a China economist at Goldman Sachs, wrote in a Sunday note. “This would suggest slower growth of industrial profit going forward. One positive factor though is the value-added tax cut effective April 1, which may also help with profit growth, especially for manufacturing enterprises.”


The State Administration of Foreign Exchange published the FX data of March. China reported a small capital outflow.

Banks made a net purchase of $7.1bn on behalf of clients in March. The overall FX market saw a total of trading volume of $2.9tr.


Bank of China released its March Credits Investment and Financing Environment Difference Index (Cifed) index on Friday. The monthly index tracks the spread between offshore and onshore renminbi-denominated bond yields.

The general index was negative and maintained its increasing trend in March, indicating that offshore yields are still higher than onshore yields but the gap is narrowing. At the end of March, the Cifed general index stood at -23.5, an increase of 11.7 from the end of February. The increase in February and January was 34.1 and 42.2 respectively.

In terms of individual sectors onshore, real estate bond yields increased by 52.4 to -74.6, while commercial banks also increased 7.2, reaching 27.3.

BOC expects the index to keep increasing but with short phases of volatility.

By Rebecca Feng
29 Apr 2019