Latest RMB loans/equity news
RMB round-up: PBoC says Chinese banks must compete globally, CSRC promises reform after MSCI inclusion, HKEX plans CNH, USD futures launch on July 10
The governor of People’s Bank of China says Chinese banks must face international competition, the China Securities Regulatory Commission (CSRC) considers changes in Stock Connect daily trading quotas after MSCI’s A-share inclusion, and the Hong Kong Exchange plans to launch CNH and dollar gold futures on July 10.
Stocks on the Hong Kong and China equity markets trade at a wide difference to each other, driven largely by tight capital controls in the Mainland. But MSCI’s decision this week to include A-shares in its Emerging Markets index could bring the two markets closer, and give a fillip to H-shares in the process. Jonathan Breen reports.
The MSCI's decision to include A-shares in its emerging market index will drive capital inflows to Chinese equities not just from index trackers but also from active fund managers. But some warn that the pace of investments could be threatened by shrinking offshore RMB (CNH) liquidity.
Global index provider MSCI announced on Wednesday that it will begin including Chinese A-shares in its emerging markets index, giving its blessing after three consecutive rejections. Here is GlobalRMB’s lowdown on what you need to know about the upcoming inclusion.
China may have got its second big win on the global stage, after the inclusion of the RMB in the SDR, on Wednesday when MSCI decided to add A-shares to its emerging markets index, but that does not mean the authorities can now rest on the laurels. The small weighting given to A-shares by MSCI is just one indication of how much China still has to do to upgrade its capital markets.
MSCI opened the door to A-shares in a landmark moment for China's reform and renminbi internationalisation agenda. Regulators, investors and analysts widely welcomed the decision, with many underlining that while initial impact of the inclusion may be limited, the first step has been taken to a rebalancing of global portfolios towards RMB assets.
The fate of Chinese A-shares in the MSCI emerging market index will be known on June 21 at about 4.30am Hong Kong time. While the likelihood of inclusion has gone up after MSCI’s latest consultation paper from March, experts are not expecting sizable capital inflows into Chinese equities to follow.
In the latest Clawback, columnist Philippe Espinasse turns his focus to the listing of infrastructure project companies in Hong Kong, saying that IPOs of Belt and Road issuers could be a big challenge.
With the world’s largest asset manager saying it backs the inclusion of A-shares in MSCI indices, the result now looks inevitable. However, the result is likely to be high on symbolism and little else and highlights the challenge for firms as they balance the demand for China exposure with the need to keep their integrity intact.
Stock Connect investors are demanding a multi-broker delivery versus payment (DVP) solution to limit counterparty risk issues that have thrown up by the different settlement cycles, Cindy Chen, country head of securities services at Citi, told GlobalRMB. Brokers are lining up to the join platforms despite the competitive challenges.
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GlobalRMB Panda Bonds league table
|Rank||Arranger||Share % by Volume|
|2||China Merchants Bank Co||22.73|
|3||China CITIC Bank Corp||19.23|
|4||Industrial and Commercial Bank of China (ICBC)||8.74|
|4||Bank of China (BOC)||8.74|
Panda Bond Database
|Pricing Date||Issuer||Country||Size Rmb (m)|
|1||12-Jun-17||China Traditional Chinese Medicine Holdings||China||2,000|
|2||22-May-17||CITIC Bank International||China||3,000|
|3||19-May-17||China Power New Energy Development Co||China||800|
|5||25-Apr-17||CAR Inc||Hong Kong||300|
Offshore RMB Bond Top Bookrunners
|Rank||Bookrunner||Share % by Volume|
|2||Bank of China (BOC)||10.06|
Latest Offshore RMB Bonds
|Pricing Date||Issuer||Country||Size Rmb (m)|
|1||01-Jun-17||Ocean Wealth (Parent: China Orient Asset Management)||China||632|
|2||11-Apr-17||Bank of China Johannesburg Branch (BOC Johannesburg)||China||1,500|
|3||22-Feb-17||Ocean Wealth (Parent: China Orient Asset Management)||China||850|
|5||04-Nov-16||China Nuclear Engineering Group||China||1,500|