With a president whose finger is never far from the Tweet button, it’s best to be prepared. The People’s Bank of China said today it will sell RMB30 billion (US$4.3 billion) of short-term yuan-denominated securities in Hong Kong next week, signaling its plan to absorb offshore liquidity and cushion against further depreciation of its currency versus the US dollar, which shocked markets yesterday by breaking through the 7-to-1 level and resulting in the US labeling China a currency manipulator.
With the central bank issuing RMB2 billionin RMB-dominated treasury bonds in Macau for the first time today, market participants have high hopes for future development. Chongwa (Macau) Financial Asset Exchange Company (MOX), the first bond management and exchange platform in Macau, has signed a cooperation memo with China Central Depository and Clearing Company (CCDC) to promote the interconnection of their respective bond markets.
This memo mainly focuses on the construction of a distribution system and other infrastructure development. Earlier last month, Macau was said to be considering launching a yuan-based stock market but no further details have been announced.
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The central bank will issue RMB2 billion ($291.04 million) in yuan-denominated treasury bonds in Macau on July 4, marking the first Chinese treasury bond sale in the gambling hub, reports Reuters.
Earlier this month, Macau was said to be considering launching a yuan-based stock market to help its diversification efforts. The city has started to develop financial leasing, wealth management and yuan clearing but services and volumes pale in comparison with neighboring Hong Kong. The financial hub hosted RMB612 billion of offshore yuan deposits as of April, compared to Macau’s RMB30 billion.
The much-vaunted “Insurance Connect” – a special channel for the marketing, sales and processing of insurance products between the mainland and Hong Kong – is in progress. So says Moses Cheng Mo-chi, Hong Kong Insurance Authority chairman.
Speaking to a forum in Hong Kong this week, Cheng said it would follow the framework of the Stock Connect and Bond Connect schemes. Hong Kong insurance companies will be allowed to sell products with a “simple structure and high guarantees” under the pilot scheme in the Greater Bay Area.
Regulators are understandably cautious, given recent concerns about capital outflows. To address that, terminal bonuses and policy payouts must be returned to the mainland in their full amount, Cheng said. The initial focus will be on motor vehicle and medical insurance products.
Shenzhen Investment Holdings, the city government’s capital arm, has launched a new RMB1 billion special corporate bond focused on building Shenzhen’s side of the Lok Ma Chau Loop, the cross-border zone being developed with Hong Kong. The issuance has a 3+2 year maturity with a coupon rate of 3.72%, according to the Shenzhen Stock Exchange.
The hi-tech cooperation zone straddles the boundary between the two cities. Shenzhen’s portion covers 3 sq km, with a focus on artificial intelligence, smart manufacturing, biology, medicine and life sciences.
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