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China market round-up: two more corporations default, BOC publishes Cifed index, Mirae launches biotech and cloud computing ETFs

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By Rebecca Feng
26 Jul 2019

In this round-up, two more Chinese corporations defaulted on their domestic bonds, Bank of China (BOC) said offshore bonds were cheaper than onshore in June, and the Hong Kong market welcomed ETFs targeting China’s biotech and cloud computing sectors.

Jiangsu Hongtu High Technology defaulted on two of its corporate bonds early this week, according to Wind data. Separately, Nanjing Construction Industrial Group defaulted on two bonds late last week.

Jiangsu Hongtu is a Shanghai-listed electronics retailer and manufacturer. It failed to make payments on the interest and principal of a Rmb700m ($102m) medium-term note sold back in 2016 and a Rmb600m medium-term note sold in 2017. Nanjing Construction failed to make payments on Rmb500m and Rmb2bn of private placement notes issued in 2017 and 2018 respectively, Wind data shows.

Total defaults in 2019 in the onshore bond market reached Rmb72bn, according to Wind.

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Bank of China published the latest monthly Credits Investment and Financing Environment Difference Index (Cifed) numbers on Wednesday.

The general index went up to 21.9 in June, 7.1 points higher than May. The positive number means that it is cheaper to raise money offshore than onshore. Compared with May, yields on offshore renminbi bonds kept declining last month against onshore ones.

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Mirae Asset Global Investments launched the Mirae Asset Horizons China Biotech ETF and Mirae Asset Horizons China Cloud Computing ETF in Hong Kong, according to a Thursday press release.

The two ETFs allow investors to gain exposure to China’s biotech and cloud computing sectors through the Hong Kong ETF market for the first time.

Both ETFs are denominated in Hong Kong dollars and started trading on Thursday on the city's bourse. 

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By June, Chinese corporations made a total of $6.8bn of investments in 51 Belt and Road countries, an 8.1% decrease year-on-year, according to an announcement from the Ministry of Commerce on Thursday. The main destinations were Singapore, Vietnam, Laos, the United Arab Emirates, Pakistan, Malaysia, Indonesia, Thailand and Cambodia.

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In June 2019, the renminbi retained its position as the fifth most active currency for international payments by value, with a share of 1.99%, according to Swift’s monthly RMB tracker.

Overall, renminbi payments value decreased by 1.83% compared to May 2019, while in general, all currencies payments decreased by 3.55%.

By Rebecca Feng
26 Jul 2019