FTZ news:
The Shanghai Free Trade Zone is piloting an online cross-border financing and payment platform that will see commodity companies registered in the zone use electronic warrants (e-warrants) instead of physical documents. The Cross-Border Commodities Financial Services Platform will match companies to commercial banks for lower interest rate trade loans, and will help to curb the risks of fake warrants and reduce inefficiencies generated by excessive paperwork. COMMIN, Bank of Shanghai, CIMB, DBS, Mastercard and ValuePay signed a strategic partnership with the platform on October 12.
In more FTZ news, global law firm Hogan Lovells has formed an association with Fujian Fidelity Law Firm to set up shop in the Shanghai FTZ. “We see the association as a value driver for many of our clients whose needs are increasingly complex in this market,” said Patrick Sherrington, Asia Pacific and Middle East regional managing partner at Hogan Lovells. This is only the third international law firm to enter into an association in the Shanghai FTZ.
Hub news:
Chinese premier Li Keqiang has thrown his weight behind Macau’s efforts towards the renminbi internationalisation process. Li said during a three-day visit to Macau this week that policies are in place for the city to become a RMB clearing centre for Portuguese-speaking countries, as well as a service platform for economic and trade co-operation between the two sides. The official RMB clearing bank in Macau is Bank of China.
RGI Index:
Somewhat tardily, Standard Chartered unveiled the August results of its Renminbi Globalisation Index (RGI) this week. And it was more or less or the same story with the index closing August at 1,929 – the same level as in June and July. While the index remained unchanged, a closer look at the breakdown saw that the drag from shrinking CNH deposits intensified in August. However, that was offset by a rebound in outstanding dim sum bonds – the result of a lighter redemption schedule.
RQFII news
The list of renminbi qualified institutional investor (RQFII) names keeps getting longer with two more joining in September. Kasikorn Asset Management becomes the first from Thailand to receive a RQFII quota and is joined by Carne Global Fund Managers (Luxembourg).
Our stories this week:
It seems we are not yet done with SDR news with Standard Chartered Bank (Hong Kong) announcing on Friday that it had approval to become the first commercial issuer of SDR-denominated bonds in China.
Staying with China’s domestic bond market, how can we forget about Panda bonds? The IFC told GlobalRMB’s Paolo Danase this week that it is keen to end a near 10 year hiatus in this buzzing asset class.
HSBC announced the findings of a worldwide survey of corporates, revealing that the usage of renminbi is higher than ever before and growing strongly.
This was undoubtedly a reflection of China’s successful renminbi internationalisation policies although Eswar Prasad, professor at Cornell University and senior fellow at Brookings Institution said it is time for Beijing to launch the second round of reforms.
And it’s not all good for the RMB as the both the CNY and CNH were under severe pressure this week thanks to a red hot US dollar backed by heightened expectations of an interest rate hike by the end of the year.
The IMF shared its thoughts on China at it's annual meeting with Markus Rodlauer, former China mission chief and deputy director of the Apac department calling the country’s fragmented regulatory regime “dangerous”.
Finally, the Shanghai FTZ recently celebrated its three year anniversary and in spite of the various reforms it has brought about, market participants say capital controls continue to be a sticking point.