China

Westpac Banking Corporation (Westpac) this week opened its first sub-branch in the Shanghai Free Trade Zone (FTZ) in what is the latest attempt by the Australian bank to leverage the opportunities expected to come from China’s economic and financial market liberalisation.

In this round-up, Hong Kong and South Korean RMB deposits fell, Hong Kong cross-border RMB trade settlement was also down in October, Westpac and BNP Paribas have expanded their presence in the Shanghai Free Trade Zone, while the Intercontinental Exchange is planning to launch RMB futures in Singapore.

China’s recent interest rate cut and a conservative approach to deal size helped Bank of Communications Taipei Branch price its Rmb2bn ($325m) Formosa bond tightly on November 27. The deal, which was only the second four tranche Formosa, was the first from a Chinese bank to feature a domestic Taiwan rating.

Industrial and Commercial Bank of China’s additional tier one (AT1) bank capital trade was completed in style on December 3 as investors poured into the dollar, euro and offshore renminbi tranches. Like its predecessor Bank of China’s $6.5bn AT1 two months ago, the deal was highly oversubscribed at launch. But market participants were far more positive this time, lauding the issuer’s more market-driven approach, writes Rev Hui.

The launch of the Shanghai-Hong Kong Stock Connect has not dampened enthusiasm for the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme among asset managers looking to get access to Chinese markets. UK-based Baring Asset Management is the latest to have picked up an RQFII licence and it is eyeing the scheme as a way of investing in Chinese A shares.

Rosinterbank, a second tier Russian bank, has revived its plans for a debut renminbi-denominated bond, holding one-on-one investor meetings this week in Asia. The bank had appeared to be close to launching a bond back in August, but some bankers think it will not be much easier to get a deal away now, unless the borrower is prepared to price very generously.

Asia is set for a hectic end to the year with Industrial and Commercial Bank of China (ICBC) set to complete its $5.7bn additional tier one (AT1) deal on December 3. While the deal is split into three currencies, dollar, euros, and offshore renminbi, pricing for all the portions will be the same, coming in at 6%.

The People’s Bank of China (PBoC) Nanning central sub branch has released a set of pilot regulations on a cross-border renminbi loan initiative for corporates based in China's Yunnan Province-Guangxi Zhuang autonomous region financial reform pilot zone (Yunnan Guangxi FRPZ), which was launched by the PBoC in November 2013. According to a copy of the regulations obtained by GlobalRMB, corporates can now get RMB loans from banks to expand their business in the FRPZ.

South Korea officially kicked off its onshore Won (KRW) and renminbi (CNY) direct trading market on Monday (December 1) in Seoul, after the regulator announced the initiative last month. While the move is seen as another step in the building up of a local RMB market, Korean market participants said to GlobalRMB that the convertibility of the won in China’s onshore market is what would be needed to fully promote RMB internationlisation in Korea.

The Hong Kong Stock Exchange (HKEx) launched on December 1 three mini futures contracts denominated in RMB. Approximate notional value of the contracts traded in the first day of trading was Rmb187m ($30.4m).

The Singapore Exchange logged record volume of derivatives transactions in November with daily average trading volumes up 45% year-on-year, following the launch of the Shanghai-Hong Kong Stock Connect last month. This was primarily driven by FTSE China A50 futures and SGX FX futures in the Indian rupee and renminbi.

China’s recent surprise interest rate cuts and a conservative approach to deal size helped Bank of Communications Taipei Branch to price its Rmb2bn ($325m) Formosa bond tightly on Thursday. The deal, which was only the second four-tranche Formosa, was the first from a Chinese bank to feature a domestic Taiwan rating — although bankers said this had little practical effect on investors, who still looked at the parent’s credit.