China industrial profit growth rose to 2.6% year-on-year in July from a contraction of 3.1% in June, according to data released by the National Bureau of Statistics on Tuesday. Petrochemical, electrical machinery, and automotive were the main industries driving growth.
“We caution that single-month readings can be quite volatile, and the rise in July’s industrial profit growth belied the weakening of industrial production growth and lower PPI inflation,” Jing Wang, China economist at Nomura, wrote in a Tuesday note.
State-owned enterprises saw an 8.1% contraction in profit year-on-year in the first seven months. Privately-owned enterprises recorded a 7% year-on-year growth in profit in the same period. Foreign enterprises saw their profit decline 6.9% year-on-year.
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In July, the renminbi dropped one position to the sixth most used currency for international payments by value, with a share of 1.81%. The Canadian dollar overtook the yuan by a margin of 0.01 percentage point, taking up 1.82% of total payments, according to Swift’s monthly RMB tracker. In June, the renminbi’s share was 1.99%.
In terms of international payments, excluding payments within the Eurozone, the renminbi still ranks eight with a share of 1.12% in July.
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HSBC conducted the first T+3 trade in the China interbank bond market with a number of offshore institutional investors, including Nomura (Singapore) and Sumitomo Mitsui Banking Corp, last Friday, according to a Monday press release.
On the day of the transaction, China Central Depository and Clearing, the Shanghai Clearing House and China Foreign Exchange Trade system jointly announced an extension of the bond settlement cycle for overseas institutional investors.
Now, foreign investors have T+0, T+1, T+2 and T+3 settlement cycles to choose from. The settlement cycles can be applied to cash bond, repo, and bond borrowing and lending transactions.
“The extension of settlement cycle in CIBM, which provides more convenience for overseas institutional investors to track the related indices, will help expedite the inclusion process of Chinese bonds into major global bond indices, such as FTSE Russell,” Ivy Zhang, executive vice-president and co-head of global markets for HSBC in China, said.
In separate news, HSBC has registered its Hong Kong regional headquarters with the People’s Bank of China to be the internal hub for all cross-border onshore renminbi (CNY) FX trading globally. The registration will allow the bank to give its international clients access to China’s onshore renminbi FX from offshore markets, according to a press release on Thursday.
The development also helps the bank enhance its offering of CNY FX spot and hedging solutions.
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The PBoC will issue its own cryptocurrency to seven institutions as early as November, according to Forbes. The hope is that these recipient institutions will eventually disperse the crypto to other international banks, according to Forbes.
The seven institutions are Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China, Alibaba Group Holding, Tencent Holdings and Union Pay.
But a day after the Forbes article, local media reported that sources from the Chinese central bank have denied the Forbes piece, saying the information is “inaccurate speculation".