News from the hubs

CNY trading and payments in UK continues to grow

According to the latest data from SWIFT 36.3% of the CNY FX transactions, excluding China, are conducted with the United Kingdom, which is a reflection of the strong position London has in the global FX market.
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Portugal could issue public debt in renminbi

Portugal is considering the possibility of public debt denominated in renminbi, in order to broaden “the investor base and attract financing,” Finance Minister Mario Centeno said in Beijing at the end of a three-day visit to China.
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Bond Connect to be established

The People’s Bank of China (PBC) and the Hong Kong Monetary Authority (HKMA) have jointly announced plans to establish a mutual market access scheme to connect the Mainland China and Hong Kong bond markets (Bond Connect).
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Internationalization of Chinese yuan to boost Kenya’s economy

Beijing is now one of Kenya’s top trading partners and this has raised the significance of the renminbi says Kenya Bankers Association (KBA) Chairman Lamin Manjang.
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Reserve Bank of New Zealand renews currency swap facility

The People’s Bank of China (PBOC) and the Reserve Bank of New Zealand have announced the renewal of a reciprocal currency arrangement (swap line) to support the settlement of cross border transactions between New Zealand and Chinese businesses.
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CFO Advisory Council RMB event takes place in New York

The CFO Advisory Council has hosted an RMB event at Bloomberg’s headquarters in New York.
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National Bank of Canada issues Panda Bond

National Bank of Canada has issued a first tranche of its Panda Bond program raising RMB3.5 billion (approximately CAD690 million) in Mainland China’s public bond market.
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Allocation of RQFII Quota to Ireland

The People’s Bank of China has announced a quota for Ireland of 50 billion yuan under the Renminbi Qualified Foreign Institutional Investors (RQFII) scheme.
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Fidelity is first foreign firm to sell investment products in China

Fidelity Investment (Shanghai) Ltd has become the first wholly foreign-owned private equity fund to operate in China’s A-share market, the Asset Management Association of China said.
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Moscow Exchange signs MoUs with two Chinese firms

Moscow Exchange (MOEX) has signed memorandums of understanding (MoUs) with two leading Chinese securities firms, CITIC Securities and Galaxy Securities
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Market Report

Offshore Renminbi – New dynamics at play

Standard Chartered have added a fifth index parameter* – foreign holdings of onshore assets – to the Standard Chartered Renminbi Globalisation Index (RGI), the first addition since its 2012 launch. With the new parameter, the RGI is no longer just a measure of offshore Renminbi (CNH) activity across key offshore centres, but also of foreign investors’ growing access to China’s onshore markets
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RMB internationalisation: can the Belt and Road revitalise the RMB?

Latest data and insights from a special edition of SWIFT’s RMB Tracker highlight five prominent factors that support a positive outlook for the internationalisation of the renminbi (RMB), despite a decline in usage of the Chinese currency in international payments.
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SWIFT analysis on Renminbi usage

The value of international CNY payments was on a negative trajectory in 2016 and fell by 16% compared to 2015, dropping from 2.03% of international payments in March 2015 to 1.78% of international payments in March 2017. It has since fallen again to 1.60% in April 2017. This decrease in payments may be attributed to a convergence of events, including the slowdown of the Chinese economy, the volatility of the CNY exchange rate and regulatory measures on capital outflows.
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Trends and implications in the internationalisation of the Renminbi

China’s ambition to internationalise its currency has brought about a unique set of opportunities, challenges and implications for those investing in the country. As China continues to invest in both international and domestic frameworks to support RMB internationalisation, it is important for institutions to articulate what strategic role they want the RMB and China to play.
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RMB now sixth most used currency for global payments

According to SWIFT October 2016 data, the RMB was now in the top six of world payment currencies by value with a share of 1.67%.
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Legal Opinion

Why is English law so widely used on China’s Belt and Road transactions?

Perhaps surprisingly, English law is widely used as the governing law of key legal documents for many Belt & Road transactions outside China, despite most of those transactions having no immediate and obvious connection to the UK. Here we examine in more detail why this might be the case and whether, over time, Chinese law will replace it
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Assessing the impact of the inclusion of China A-Shares in the MSCI Emerging Markets and the MSCI ACWI Indices

The imminent reactions to the announcement of MSCI’s inclusion of China A-Shares in the MSCI Emerging Markets and the MSCI ACWI Indices has brought some welcomed attention to China investments.
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CFETS will show which way the Renminbi is heading during the US dollar bull

Currency watchers are sometimes baffled by the role of the CFETS in regulating the relation of RMB to the US Dollar. However, the recent history of CFETS gives some clues over what to expect in the coming months if the USD continues to rise.
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London is China’s route to international investors

China is the world’s most populous nation and as the second largest global economy, with the second largest equity market by capital value in the world, and leadership of the G20, it is a major engine of global economic growth.
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The potential impact of Brexit on the UK’s relationship with the RMB

The result of the recent referendum vote on whether the UK should leave the European Union has very significant ramifications which are going to take time to play out. David Pavitt, Managing Director, Head of RMB Business Development for Global Markets EMEA at HSBC examines some of the issues resulting from the Brexit decision with respect to the UK’s position as a leading RMB trading and clearing centre.
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Market Commentary

Belt and Road Exit 5 off the M25

I had the good fortune to have lunch with Ying Yong, the Mayor of Shanghai at Mansion House recently. He wants Shanghai to be an International Financial Hub by 2020. Even by Chinese standards this does not leave him much runway, and precious little time for the rest of world to show up in Pudong.
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China’s capital controls Implications for China-focused companies

In late November 2016, following speculative reports of increased restrictions on capital outflows, four Chinese government agencies, including National Development and Reform Commission (NDRC), Ministry of Commerce (MOFCOM), State Administration of Foreign Exchange (SAFE) and People’s Bank of China (PBOC) issued a joint statement which stated that outbound investment deals will be subject to strict reviews.
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Infrastructure Project Finance in China: By Claude Jiang, Associate, Shearman & Sterling LLP, Shanghai

Project finance is becoming an attractive topic in China due to the recent incentives on public private partnerships (PPP), the Silk Road Economic Belt and the 21st Century Marine Silk Road initiative (Belt and Road).
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Seizing new opportunities to invest in China ETF’s: A straight forward vehicle

By Brendan Mueller, Senior Manager – Product Development, China Europe International Exchange AG (CEINEX)
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China – Stable FX reserves likely to require more forceful steps. By Louis Kuijs, Oxford Economics

Since 2015, the People’s Bank of China’s policy has been to allow some deprecation versus the US$ in the face of pressures from financial capital outflows and a globally strong greenback, but to intervene to control and manage the pace of depreciation.
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Global business use of Chinese renminbi climbs by 7 percentage points

Almost a quarter of companies are now using the renminbi (RMB) to do business with China, but few are capitalising on the Chinese government’s flagship ‘Belt and Road’ trade initiatives, a new survey from HSBC Commercial Banking shows.
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A tumultuous 18 months in China’s Financial Markets – Implications for International Corporates

It has been a tumultuous 18 months for China as it seeks to rebalance its economy to a more consumption-led basis and address the key economic issue: excess leverage in the system.
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A good week for Chinese banks –Taking control of the offshore and onshore RMB markets

It’s been an interesting week, during which there have been two very significant developments in RMB trading.
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Partner Content

Trading China’s Bond Markets with confidence: By Ee Chuan Ng is China Head of Sales for Bloomberg L.P.

In global markets currently characterized by political and economic uncertainty, China’s $9 trillion bond market presents a potential long term investment opportunity for yield that is getting harder to ignore.
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CEINEX – Filling the gap for international investor’s China exposure

CEINEX introduces first derivatives on Chinese Index ETF in Europe / Joint Venture on its way to becoming a full-fledged financial market place
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A Connectivity Specialist

The Redback Reporter talks with James Banister, CEO, FXecosystem, a leading provider of FX connectivity services.
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ICBK – working to promote the growth of RMB business in Canada

Industrial and Commercial Bank of China (Canada) (“ICBK”) was designated as the RMB Clearing Bank in Toronto by the People’s Bank of China (“PBOC”) in November 2014. On March 23, 2015, ICBK officially inaugurated the Canadian RMB Clearing Bank and Trading Hub and has thus preliminarily established a sustainable world-wide “24/7” real-time RMB trading and clearing network
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FX trading on MOEX – Liquid and growing in demand

The Redback Reporter talks to Igor Marich, Managing Director of FX and Money Markets at the Moscow Exchange.
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EBS Market

EBS Market, EBS BrokerTec’s flagship central limit order book electronic trading platform, supporting spot FX currencies, precious metals and non-deliverable forwards (NDFs), expanded its core currencies to include the offshore Chinese renminbi (CNH) back in 2010. Since then, EBS has built a large and diverse trading community of more than 100 institutions trading daily, and developed multiple trading order types, features and functions for CNH. Darryl Hooker, Co-Head of EBS BrokerTec Markets, outlines how the currency has taken off to become the ‘major minor’ currency it is today.
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Product Launch

New Fixed Income Indices covering China Bonds from Bloomberg

Bloomberg has launched two new hybrid fixed income indices that include RMB-denominated China bonds on top of the global indices under the Bloomberg Barclays Benchmark Fixed Income Index family.
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Economic Analysis

Westpac MNI China Consumer Sentiment Indicator rebounds

Consumer sentiment improved in December, led by a bounce-back in consumers‘ optimism about their expected personal finances which offset a pullback in durable buying conditions.
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Follow the Analyst

Unintended consequences

Counter to his campaign promises, President Trump has not labelled China a currency manipulator since taking office – at least not yet. This delay may be an acknowledgement that China’s intervention in the FX market is in fact directed at preventing flows from escaping the country and dragging down the value of the CNY. It may also be a recognition of the unintended consequences that a poorly thought-out or rapidly implemented policy may have.
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RMB Outlook: Tail and Headwinds Fading

China feels Brexit too. The Chinese Yuan (CNY) continues to weaken breaking 6.60 (Chart 1), the highs reached earlier this year post the devaluation. The risk-off environment from Brexit has strengthened the USD and weakened CNY.
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Wealth, Travel & Lifestyle

Drivers for growth in the Chinese market

The inexorable growth of the Chinese Middle Classes is setting a new paradigm for growth managers as the local market opens further to foreign investors. Stephanie Li, investment analyst at Aubrey Capital Management in Edinburgh highlights some of the new drivers for growth in the Chinese market.
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China’s private wealth machine

The world’s most populous nation is churning out new cohorts of young, sophisticated and tech-savvy high-net-worth individuals, creating opportunities – and challenges – for financial services providers. By Jennifer Zeng and John Ott
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“Listen as that RM is not for me” – The unique needs of the APAC HNW

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Asia-Pacific to Lead the Global Wealth Management Industry

By Chirag Thakral and Varun Rawat, Lead Strategic Analysts, Market Intelligence, Capgemini Financial Services
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The development of Wealth Management as a profession in China

Since 2010 China has become the second largest economy in the world and listed among upper middle income countries which are characterised by an explosive growth of individual wealth. China achieved GDP per capita at US$8,000 in 2015 and the number of its HNWIs has approached that of the USA.
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The rise of Chinese HNWIs presents opportunities in the expanding wealth management industry

Asia-Pacific continues to be the driving force of global high net worth individual (HNWI) population and wealth. With a number of rapidly expanding economies in the region, the wealth management industry is well-positioned to benefit from the rise in demand for managing the increasing HNWI wealth.
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China business travel market overtakes the United States

China’s business travel market has overtaken the United States as the number one business travel market in the world. This is one of the key findings from the GBTA BTI™ Outlook – China 2016 H1, a report by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), sponsored by Visa, Inc.
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Regulatory Issues

Tightening the reins – Promulgation of the Administrative Measures on Suitability for Securities and Futures Investors

On December 15, 2016, the Administrative Measures on Suitability for Securities and Futures Investors (“Measures”) were officially promulgated. As outlined by the China Securities Regulatory Commission (“CSRC”). By Natasha Xie and Brigitte Lu, JunHe, Shanghai
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Significant amendments to Chinese foreign investment law

Reflecting upon the experiences of the application of the negative list approach in the Free Trade Zones (“FTZ”) in Shanghai, Tianjin, Guangdong and Fujian, the Central Government of PRC decided to expand the application of such approach nationwide. By Dr Helena H. C. Chen, Chief Representative of Beijing Office and Partner, Pinsent Masons LL
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Regulatory developments in the Panda bond market

Dagong Global Credit Rating (Hong Kong) recently published an important report into the Panda bond market. This is the first of two extracts we will be publishing from this report. This article focuses on how major regulations of Panda bonds are evolving.
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Business Focus

The Chinese equipment leasing market. By Yanping Shi and Ting Yang

​In 2015, China’s economy still suffered downturn pressure. The Central Committee and the State Council promoted the principle of making progress while maintaining stability. In this context, China’s GDP reached Rmb676,708, increasing 6.9% year-on-year, marking the lowest growth for 25 years. The macroeconomic recession caused pressure for the leasing industry from the following three aspects.
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