China People & Markets Roundup: RMB Stays Fifth in Payments League Table, Banks to Rate Chinese Rating Agencies, UBS Aims Sets up Chinese Equity Strategy

Publisher:Euromoney Time:2018-07-27

The renminbi is the fifth most used payments currency in the world despite a fall in payments value in June, credit rating agencies in China are set to undergo a review by commercial banks, and the asset management arm of UBS starts a fund to tap both onshore and offshore Chinese stocks.

RMB remained the fifth most used payments currency globally in June, according to Swift’s RMB tracker. It had a share of 1.81% of all payments, just above the Canadian dollar’s 1.77%. But the value of RMB payments decreased by 3.65%, which was a more drastic drop than the 0.08% average fall among all currencies.

Hong Kong continued to be the largest offshore RMB clearing centre, processing 75.98% of all RMB payments outside China. The UK and Singapore ranked second and third, with market shares of 5.66% and 4.19%, respectively.

UBS Asset Management has launched a new China equity strategy, according to a July 23 media report. The asset manager confirmed the launch to GlobalRMB. The fund, named BS (Lux) Equity SICAV All China fund, was officially launched in May. It targets both onshore and offshore-listed Chinese stocks, capturing the opportunities from the liberalisation of the Chinese equity market, Ben Shi, the fund’s manager, was quoted as saying.

As the Chinese government continues to open up the onshore market, the onshore and offshore market will eventually be seen as one market,” he said. “A fund with the flexibility to allocate across the two markets will enable us to deliver superior investment returns for our clients.”

The National Association of Financial Market Institutional Investors (Nafmii) has asked commercial banks to assess the performance of credit rating agencies, it said in a July 26 statement.

Five major Chinese agencies — China Chengxin Credit Ratings, China Lianhe Credit Rating, Dagong Global Credit Rating, Shanghai Brilliance Credit Rating and Golden Credit Rating International — will be the targets in this round of assessment. Banks must submit their opinions to Nafmii by August 2.

RMB internationalisation got off to a strong start in 2018, Bank of China’s Offshore RMB Index shows. The index stood at 1.29% in the first quarter, up 0.04 percentage points from the end of last year, according to a July 24 report by BOC. It was also 0.03 points higher than the bank’s forecast.

BOC attributed the index’s gains to favourable policies in January, such as the People’s Bank of China’s move to make cross-border remittance easier, and the China Foreign Exchange Trade System’s decision to allow banks from Cambodia, Kazakhstan, Mongolia and Thailand to participate in the onshore FX market.

The rebound in dim sum bond sales also helped. In the first quarter, the stockpile of outstanding CNH bonds ended successive quarterly decline since the last quarter of 2016, and stood at Rmb391.7bn ($57.7bn), according to BOC. At Rmb30.5bn, issuance of these bonds recorded a quarterly uptick of 80%.

Regulators have approved the first Belt and Road renewable corporate bond, a form of perpetual bond in China, the Shanghai Stock Exchange said in a July 20 statement.

Lianyungang Port Group, the issuer, will sell Rmb2bn of bonds which are rated AA+ domestically. It will use no less than 70% of the proceeds to fund the building of a railway loading station at the Shanghai Cooperation Organization (Lianyungang) International Logistics Park.

Foreign investors poured Rmb42.3bn into the A-share market through Stock Connect between June 1 and July 19, according to a July 23 report by Xinhua, citing data from Wind. The state news agency noted that net inflows stood at Rmb521.5bn on July 19, up 8.32% from the start of June.

The Auckland branch of Bank of China opened on July 26, the bank said in a statement on Friday. The branch will offer corporate deposits and loans, syndicated loans, international settlement, and trade finance.

Together with Bank of China (New Zealand), the bank’s subsidiary in the country, the new branch will facilitate trade and investment between China and New Zealand, the bank said.