The week in renminbi: first Sino-Japan ETF connect launches, SSE allows transfer of defaulted bonds, CBIRC warns traders shorting yuan

In this round up, the China Securities and Regulatory Commission (CSRC) gave permission for eastbound Sino-Japan ETFs, Shanghai Stock Exchange (SSE) set up a scheme for investors to trade defaulted or high risk bonds, and the head of the Chinese banking regulator warned traders of ‘huge losses’ if they shorted the renminbi.

  • By Rebecca Feng
  • 27 May 2019
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CSRC has launched a cross-border ETF scheme to connect the Chinese and Japanese stock markets, according to an announcement by the regulator on Friday.

These eastbound ETFs will be established onshore by Chinese asset management firms and trade on the Shanghai Stock Exchange.

They will launch under the Qualified Domestic Institutional Investor (QDII) scheme and must invest no less than 90% of assets in Japanese ETFs that track the Nikkei 225 Index or Topix Stock Price Index.

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SSE has set up a scheme to allow qualified institutional investors to trade distressed debts, according to a notice from the exchange on Friday.

“Due to a few recent defaults and risk incidents, the existing trading arrangements are no longer sufficient to satisfy the needs of market participants,” the statement read.

Qualified bonds include those bonds that have themselves defaulted, and those issued by borrowers that have defaulted before.

Only institutional investors registered with the SSE, that have a high risk appetite and have experience in handling high-risk bonds can participate in the scheme.

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Traders shorting the renminbi will face “huge losses”, according to Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC). Xiao Yuanqi, a CBIRC spokesperson, made the comment on behalf of Guo at a finance forum in Beijing on Saturday.

He added that the regulator is not expecting persistent declines in renminbi.

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A total volume of Rmb18.99tr ($2.76tr) traded on the Chinese foreign exchange market in April, according to a statement by the State Administration of Foreign Exchange on Friday.

Trading between banks and their clients reached Rmb2.22tr, while trading between banks hit Rmb16.77tr.

There was a total of Rmb6.63tr traded on the FX spot market, and Rmb12.36tr on the derivatives market.

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China will encourage enterprises to increase research investments, said Wang Zhijun, vice minister of the Ministry of Industry and Information Technology, in a Politburo meeting on Friday.

The government will also launch favourable tax policies that allow enterprises to deduct expenses related to research and development, state media Xinhua reported on the same day.

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Harvest Fund Management and Bloomberg announced that they would together develop fixed income funds that track the Bloomberg Barclays Indices, making Harvest the first onshore asset management company to do so.

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Profits earned by China’s industrial companies — those with an annual revenue of more than Rmb20m — shrank in April after a sharp rebound in the previous month, according to data released by the National Bureau of Statistics (NBS) on Monday morning.

Industrial profits in April dropped 3.7% year on year to Rmb515.4bn, a sharp downturn from the 13.9% upward surge in March.

For the first four months of this year, industrial profits dropped 3.4% on an annual basis to Rmb1.81tr.


  • By Rebecca Feng
  • 27 May 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 19.93
2 Industrial and Commercial Bank of China (ICBC) 13.40
3 China Merchants Securities Co 12.94
4 Agricultural Bank of China (ABC) 7.84
5 China Securities 6.54

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 07-Aug-19 Daimler Germany 5,000
2 31-Jul-19 Cassa Depositi e Prestiti SpA Italy 1,000
3 24-Jul-19 Semiconductor Manufacturing International Corp (SMIC) China 2,000
4 10-Jul-19 BMW Finance N.V. Germany 3,500
5 20-Jun-19 Maybank Malaysia 2,000

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