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The week in renminbi: US and China reach starter deal, schedules set for lifting foreign ownership rules, Macau mulls offshore renminbi Nasdaq

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By Rebecca Feng
14 Oct 2019

In this round-up, China and the United States emerged out of a two-day trade talk with a “phase one” deal, China’s securities regulator set dates for further opening up of onshore financial markets and the Monetary Authority of Macau plans to launch a Nasdaq-like stock exchange for the offshore renminbi market.

Chinese vice premier Liu He held the latest round of US-China trade negotiations with the US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin on Thursday and Friday last week. Liu also met US president Donald Trump on Friday.

According to Trump, the two countries have reached a “phase one part of the deal”. The US will not increase tariffs on $250bn of Chinese imports from 25% to 30% on October 15. In return, China agreed to purchase more agriculture products and made promises including better protecting intellectual properties and not competitively devaluating the renminbi.

“The deal I just made with China is, by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country,” Trump tweeted on Saturday evening. “In fact, there is a question as to whether or not this much product can be produced? Our farmers will figure it out. Thank you China!”

Trump added on Sunday that the deal requires China to “immediately start buying very large quantities of our agricultural product” and touches on other aspects including the financial services industry.

An hour later, Trump tweeted again, all in capital letters: “China has already begun agricultural purchases from our great patriot farmers and ranchers.”

China’s official statement, however, was not as positive. The statement did not refer to the outcome of the trade talks as a “deal” at all.

“The US and China held sincere, efficient and constructive talks regarding trade matters of mutual concern,” the statement read. “Both sides have made actual progress regarding agricultural products, intellectual property, foreign exchange rates, financial services, wider trade collaborations and technology transfer.”

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The top securities regulator, China Securities Regulatory Commission, announced a timetable for lifting foreign ownership limits on onshore futures companies, fund management firms and securities firms in a Friday press conference.

At the moment, foreign firms can own up to 51% of companies in these three industries. That limit for futures trading companies will be lifted on January 1 next year. Mutual fund companies and securities firms will also see that limit scrapped on April 1 and December 1 next year, respectively.

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The Monetary Authority of Macau has submitted a proposal to the Chinese central government to build a “Nasdaq-like stock exchange for the offshore renminbi market”, He Xiaojun, director of the Guangdong Local Financial Supervision and Administration Bureau, said on Saturday at a conference in Guangzhou.

He added that the exchange will be a “gift” to Beijing as Macau celebrates the twentieth anniversary of its handover from Portugal to China.

On Sunday, the monetary authority announced through its WeChat account that the plan is still “in the feasibility study phase”.

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Shanghai Stock Exchange (SSE) issued a notice on Friday delaying the publishing of the SSE Star Market 50 Component Index.

The bourse previously said it would launch the index after at least 30 stocks and depositary receipts had been listed on the Star market for 10 days.
By Rebecca Feng
14 Oct 2019