Most of the official announcements in February came from regulators who, for various reasons, are seeking to encourage the organisations that they oversee to compete in new areas of China’s financial services industry.
A theme running through the latest batch of announcements is the desire of the China Securities Regulatory Commission (CSRC) and other parties to encourage change in the mutual fund industry. It has become (much) easier for firms to enter the industry and to set up new funds. In addition, the CSRC wants to increase its control over private funds at a time that official policy supports the development of financial services in Qianhai, Shenzhen.
Funding costs in the offshore renminbi (CNH) market continued to fall even after the head of China’s securities regulator indicated that Beijing may expand the investment quota for renminbi-denominated investment in the onshore bond and equities market. On Monday Guo Shuqing, chairman of the China Securities Regulatory Commission, said in a speech in Hong Kong that China may boost the quota for the renminbi Qualified Foreign Institutional Investor (RQFII) scheme. He did not give a timeline or figure.
The People’s Bank of China (PBoC) recently launched a pilot cross-border renminbi loan programme, enabling companies in Shenzhen’s Qianhai region to borrow from banks in Hong Kong. The move is Beijing’s latest attempt to liberalise its financial markets.
Over the last few weeks, the CNH forwards market suggests that both renminbi and the CNH will appreciate relative to the US dollar in 2013. This view could well be mistaken.
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