• Wednesday, August 15, 2018

Beijing buys more US Treasuries, Bangladesh Pandas on the horizon, foreign financial firms making in

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    China people & markets round-up: Beijing buys more US Treasuries, Bangladesh Pandas on the horizon, foreign financial firms making inroads

    By Noah Sin, Paolo Danese 06:30 AM

    https://www.globalcapital.com/artic...orizon-foreign-financial-firms-making-inroads

    China keeps growing its stockpile of US Treasury bonds, the government of Bangladesh may
    issue a Panda bond following the acquisition of the Dhaka Stock Exchange by two Chinese
    bourses, and foreign asset managers and insurance firms are expanding their onshore
    presence.

    China remained the largest foreign owner of US Treasuries in March, holding $1.19tr of the bonds, the most since October 2017, according to data released by the US Department of the Treasury.

    Japan and Ireland are the second and third largest holders of US Treasuries, holding $1.04tr and $317.9bn of the bonds in March, respectively.
    *
    Bangladesh’s government and some of its corporations could issue Panda bonds in China to help finance infrastructure projects in the country, a spokesperson at the Shenzhen Stock Exchange (SZSE) told a May 15 press conference.

    The spokesperson named Panda bond issuance as one of the key priorities for the bourse
    following the acquisition of the Dhaka Stock Exchange by the SZSE and the Shanghai Stock
    Exchange earlier this month. SZSE will also encourage Chinese companies to raise funds in
    Dhaka by issuing bonds, stocks and asset-backed securities, the spokesperson added.
    *
    Chinese regulators have allocated $50m of Qualified Domestic Limited Partnership (QDLP) quotas to the Shanghai-based wholly foreign-owned enterprise (WFOE) of BNP Paribas Asset
    Management, the company said in a May 9 press release.

    The asset manager will use the quotas to set up funds targeting offshore environmental, social and governance (ESG)-related investments, noting that it is the first global fund manager to dedicate a product to ESG themes in China.

    Scottish manager Aberdeen Standard Investments (ASI) also made its China debut with an
    onshore private fund, the firm said on May 17. The ASI fund was launched through its onshore WFOE and invests in about 30 A-shares listed firms with an initial focus on the consumer and services sectors, the firm said in a press release.

    “China’s continued market liberalisation is set to create enormous new opportunities for both global and domestic investors,” said Amy Wang, ASI’s China head.

    Fullgoal Fund Management Company, which is partly owned by Canada’s BMO Financial Group, has won regulatory approval to set up a fund in the onshore market to target A-shares which are set to be included in MSCI’s benchmark, according to a May 16 announcement by the China Securities and Regulatory Commission.

    The index-enhanced fund will use MSCI China A Inclusion Index as its benchmark. China
    Construction Bank will be the custodian. The green light came just one day after MSCI finalised the 234 stocks it is including in its benchmark emerging market index, starting on June 1.

    A number of international financial institutions are queuing to launch operations in Shanghai after China lifted the cap of foreign ownership in the financial sector, officials in the city said in a May 14 statement.

    Bermuda-incorporated insurer FWD submitted its application to set up a company in Shanghai on May 4, according to the statement. Local media reported that the company will be a joint venture, with FWD holding a 51% majority stake in it.

    The statement also noted that Allianz Insurance is preparing to set up a wholly owned subsidiary in the city on May 9 and that regulators have approved Industrial and Commercial Bank of China to join hands with AXA to set up an insurance asset management company.

    France’s Oney Bank has filed to set up a consumer finance joint venture, and Jordan-based Arab Bank has decided to set up a branch in the city, the statement added.

    US-listed advisory and broking firm Willis Towers Watson announced it had been approved by the China Banking Insurance Regulatory Commission (CBIRC) to become the first foreign broker to set up a fully licenced insurance brokerage business in China, the firm said on May 15. The firm first entered the Chinese market in 1994, Scott Burnett, the firm’s head of Asia, said in a statement.
    *
    Hong Kong-based Hang Seng Indexes (HSI) said on May 17 it will launch a Stock Connect Big Bay Area Composite Index next week. The index will include 250 firms listed in both China and Hong Kong whose main business is in the Greater Bay Area that comprises Guangdong province, Hong Kong and Macau. Nearly all the firms being initially included have their base of operations in Shenzhen, with 31% being from the financial sector and property firms accounting for 20%, HSI noted.
    *
    Officials said they will encourage offshore-listed companies to launch China Depository Receipts on the Shanghai Stock Exchange, expand the issuance volume of Panda bonds in the city, and continue their preparation to launch the Shanghai-London Stock Connect later this year.