FX:
People’s Bank of China's renminbi fix against the dollar was set at 6.7972 on Monday morning, 23bp stronger from Friday. In the spot market, the CNY was trading at 6.8122 as of 1:15pm , with the CNH at 6.8114, up 0.02% and 0.04% from their previous close respectively, according to Wind data.
The dollar index was trading at 97.17 at the same time, up 0.03% from the previous close, according to Wind . The Thomson Reuters CNY reference index closed at 94.00 on Sunday, down 0.19% from its previous close.
The trade-weighted index by CFETS closed at 94.24 on June 16, up 0.16% from the previous week, with the BIS basket and special drawing rights basket at 94.22 and 94.76, up 0.24% and 0.19%, respectively.
Regulators:
The CSRC has welcomed the prospect of A-share inclusion by MSCI this week, a spokesperson said on June 16, arguing that no emerging market index will be complete without the presence of Chinese stocks. However, the spokesperson also made clear that China will not accommodate the index provider for the sake of A-share inclusion.
“Whether or not A-share will be included, the course of reform of China’s capital markets, towards marketization, the rule of law and internationalisation, will be not be altered,” said the spokesperson. “The pace of reform and opening up will not change because of A-share inclusion.”
FTZs:
China has published a new negative investment list in FTZs to provide easier access for foreign investors, according to the State Council. The negative list details restrictions for foreign investors in various sectors. Some 95 special management measures were included in the new list, which covers 15 sectors, ranging from mining to manufacturing and finance. The State Council said that 10 categories and 27 measures regarding sectors, including banking, were removed from the last negative list in 2015.
The Shanghai FTZ is planning to establish a free trade port area with higher standards of supervision and more innovative systems for investment, finance and FX transactions, according to the FTZ authority on June 16.
Payment:
Malaysia’s RHB Bank was approved as an indirect participant in the renminbi cross-border payment system on June 16, according to China International Payment Service (CIPS). As of May 19, there were 584 indirect onshore and offshore bank branches approved as CIPS indirect participants.
Trade:
China’s non-financial outward direct investment (ODI) stood at $8.22bn in May, down 38.8% year-on-year, according to the Ministry of Commerce. This puts the total ODI from January to May at $34.59bn — a yearly fall of 53%.
Belt and Road:
The MofCom also noted that China invested $4.99bn in 45 One Belt One Road (OBOR) countries between January and May, which made up 14.4% of all of China’s ODI in the same period.
The AIIB approved its first equity investment on June 15, according to an announcement by the development bank. A $150m investment will go to the India Infrastructure Fund, which aims to support mid-cap infrastructure companies in India.
Separately, the AIIB approved $114m of loans for a road building project in Georgia and $60m of loans for a hydropower plant regeneration project in Tajikistan on June 15.
The Export-Import Bank of China’s outstanding loans for OBOR-related projects exceeded Rmb620bn ($91.18bn) at the end of Q1, according to a June 15 report by Xinhua. The policy bank said the loans were used to fund over 1,200 projects.
The first major energy project in the China-Pakistan Economic Corridor was put into operation in May, according to a June 14 announcement by Industrial and Commercial Bank of China. The bank led the financing for Pakistan’s Sahiwal Coal-Fired Power Station, arranging a syndicated loan of $1.44bn for the project. The total investment to the project stood at $1.8bn.
Hubs:
Norman Chan, chief executive of the Hong Kong Monterey Authority (HKMA), has said that Hong Kong is unlikely to switch its currency peg with the dollar for a peg with the renminbi, according to a June 19 Chinese media report.
Chan said that the dollar peg has worked effectively for the past 30 years, and that Hong Kong will only consider a peg with the renminbi when it fulfils several conditions, including full convertibility, full liberalisation of China’s capital account with no capital controls, a financial market deep and wide enough for Hong Kong’s FX fund to hold assets to support the city’s monetary base, and synchronized economic cycles between the two markets.
Our most recent stories:
The Chinese Ministry of Finance is planning to issue Rmb14bn of offshore renminbi treasury bonds in 2017, alongside its first dollar bond in over a decade. The first round of the CNH auction will take place on June 22, according to HKMA.
China will not let the renminbi fall further ahead of the country’s political transition in autumn, the head of Asia FX and rates strategy at Barclays told a conference organised by the Asia Securities Industry & Financial Markets Association ( Asifma ) on June 14.
Also at the Asifma conference, Hong Kong’s secretary for financial services and the treasury said that there is not enough understanding of how OBOR’s financing will work, and that the city can play a role in bridging the knowledge gap.
The Reserve Bank of Australia has endorsed China’s renminbi internationalisation strategy as RMB activity in Sydney picks up, despite RMBi’s setback globally.
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