China capital markets - Be prepared to seize investment opportunities - Together we thrive - HSBC Global Banking
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China capital markets
Be prepared to seize investment opportunities
Together we thrive
China capital markets Be prepared to seize the investment opportunities 2
Why China?
China’s economy is more open and globally connected than ever before, with a strong emphasis on trade and investment openness, and various investment
channels to help investors to access its domestic capital markets.
China’s capital markets China’s equity market Internationalisation
are among the biggest globally yet it is largely funded by domestic investors of RMB
1,508 listed RMB is the
3
companies
China’s equity market: China’s bond market:
on the Shanghai Stock Exchange rd most actively
used currency
world’s world’s (as of August 2019)
in trade finance
(as of August 2019)
2ndlargest 2nd 2,166
and the
5
largest listed
th
most active
(by total market cap) companies currency for
international
on the Shenzhen Stock Exchange
2 payments by value
(as of August 2019)
(as of August 2019)
3 5
Estimates of
As of 2018, 1.89% of global
USD 320bn FX reserve is allocated to
RMB, compare with 1.23%
1.89% China’s green bond market
new foreign inflows into China’s bond at the end of 2017
market as a result of inclusion into three
China has the China represented
2nd 25%
key global benchmark bond indexes
USD 85bn
Reserve managers expect
largest
5.4% to contribute 3.5% by
2020 and 5.4% by 2025 of all green bonds
inflows expected due to the inclusion green bond market
of their reserves in RMB
in the world
issued in 2018
of two key global equity indexes
6 1 4
1 HSBC Reserve Management Trends 2019 4 ASIFMA and FTSE Russell August 2019
2 World Federation of Exchange, August 2019; Bloomberg, September 2019 5 Swift, July 2019
3 Shanghai Stock Exchange, August 2019; Shenzhen Stock Exchange, August 2019 6 HSBC Global Research
China capital markets Be prepared to seize the investment opportunities 3
Increasing connectivity over time
China is gradually opening up its capital markets, with simplified channels, enlarged quotas and easier access for foreign financial institutions and investors.
Dec 2016
2016
2002 2014 China Interbank Bond Market
Shenzhen-Hong Kong
Stock Connect launched
(CIBM) Direct launched
Qualified Foreign Institutional Shanghai-Hong Kong Providing access to a market
Investor Scheme (QFII) launched Stock Connect launched Giving foreign financial institutions that is home to many “new
access to a wide range of fixed economy stocks” in sectors
Opening up China’s A-share market Providing a new route into such as technology, media
income instruments in China’s
to foreign investors for the first time China’s largest stock exchange and healthcare
bond market
2011 2015 Oct 2016
RMB Qualified Foreign Mutual Recognition of Inclusion of RMB into the
Institutional Investor Funds (MRF) launched International Monetary
Scheme (RQFII) launched Fund’s Special Drawing
Providing mainland China and
Right currency basket
RMB version of QFII officially Hong Kong products with new
launched, allowing onshore cross-border mobility RMB now makes up 10.92%
securities to be traded of the basketChina capital markets Be prepared to seize the investment opportunities 4
What you need to know
®® China has introduced simplified channels ®® STAR market represents a step forward in
to enter the CIBM the reform of the IPO system and providing
®® Stock Connect provides easier cross-border technology companies with greater access
trading between Hong Kong, Shanghai and to capital
Shenzhen stock markets ®® There will no longer be any quota restriction
®® Under PBOC Notice 159, foreign investors for QFII and RQFII. Foreign investors can
can now easily access CNY FX to hedge now invest after necessary registrations
China bonds and equities portfolio
Jun 2017
Inclusion of A-shares into
MSCI’s Emerging Markets Aug 2019
Index is announced
STAR market represents a Sep 2019
Driving greater demand by May 2018 Apr 2019 step forward in the reform of
foreign investors for onshore QFII and RQFII investment
the IPO system and providing
exposure Daily quota of northbound quota restrictions are abolished
Inclusion of China bonds technology companies with
and southbound stock connect in Bloomberg indices greater access to capital by China Safe Administration
increased by 3x to RMB 52bn of Foreign Exchange (SAFE)
and RMB 42bn respectively.
Jun 2018 Jan 2019 Jun 2019 July 2019
Jul 2017 PBOC Notice 159 QFII/RQFII London-Shanghai Stock A+H companies listed
consultation to Connect on the STAR Market
Bond Connect northbound Offshore investors can access harmonise both (‘Science and Technology
launched onshore deliverable CNY under Connecting the London Stock
channels and Innovation Board’) are
the schemes of CIBM, Bond Exchange (LSE) and the Shanghai
Allowing overseas investors to further relax and eligible for trading via
Connect and RQFII, with HKMA Stock Exchange (SSE), allowing
trade on the CIBM with their usual expand the scopes. Stock Connect.
guidance on CNY for Stock global investors in London to
international methods via the access shares listed in SSE via
Connect platform and settle bonds Connect released in June 2019.
Global Depository Receipt (GDR)
more simply via Hong Kong and Chinese investors to buy
LSE-listed stocks via China
Depository Receipt (CDR)China capital markets Be prepared to seize the investment opportunities 5
Investing in China’s capital markets
With the further opening up of the onshore capital market, offshore investors can now access China’s equity and bond markets via a variety of schemes.
The schemes are designed for different types of investors and products.
Applicable products Eligible investors Source of fund Quota availability
®® Exchange-listed A-shares, bonds and warrants ®® Overseas asset management companies, insurance ®® FCY (converted ®® No investment
®® Fixed income products traded in interbank bond market companies, securities firms, banks, funds, government at onshore CNY) quota*
QFII ®® Securities investment funds agencies ®® Only necessary
®® Index futures (for hedging only) registration
®® Subscription to initial public offerings, additional process required*
issuance, rights issues and convertible bond issuance
®® The New Third Board & Sci-Tech Innovation Board
(STAR Market)
Inbound Investment
®® Exchange-listed A-shares, bonds and warrants ®® Qualified financial institutions in designated offshore ®® FCY (converted ®® No investment
®® Fixed income products traded in interbank bond market RMB markets offshore at CNY quota*
RQFII ®® Securities investment funds or CNH) ®® Only necessary
®® Index futures (for hedging only) ®® Offshore RMB registration
®® Subscription to initial public offerings, additional process required*
issuance, rights issues and convertible bond issuance
®® The New Third Board & Sci-Tech Innovation Board
(STAR Market)
®® Cash bonds in interbank market, including government Sovereign entities: ®® FCY (converted ®® No quota
bonds, People’s Bank of China (PBoC) bills, financial Foreign central banks, monetary authorities, international offshore at CNY
CIBM bonds, commercial paper and medium-term notes financial organisations and sovereign wealth funds or CNH)
®® Derivatives such as bond forwards, bond lending, ®® Offshore RMB
Non-sovereign entities:
interest rate swaps and forward rate agreements
Commercial banks, insurance companies, securities
companies, fund management companies, other asset
management institutions accepted by the PBoC, such as
pension funds, charity funds, and endowment funds, etc.
*In September 2019, SAFE announced that there will no longer be a quota restriction for QFII and RQFII. The rules of implementation are yet to be released.China capital markets Be prepared to seize the investment opportunities 6
Applicable products Eligible investors Source of fund Quota availability
®® Fixed Income instruments in interbank market, including ®® Central banks, monetary ®® FCY (converted ®® No quota
offshore at CNY
Inbound Investment
government bonds, PBoC bills,financial bonds, commercial authorities, international
paper, medium-term notes and other instruments financial organizations, or CNH)
Bond sovereign wealth funds ®® Offshore RMB
(The initial phase of Bond Connect only supports Northbound Trading by institutional
Connect professional investors)
®® Commercial banks, insurance
companies, securities firms,
asset management companies,
other wealth management and
other financial institutions
Northbound Northbound ®® FCY (converted ®® No market quota
®® Constituent stocks of SSE180 index and SSE380 index ®® Overseas Institutional and offshore at CNY ®® Daily quota of
®® Constituent stocks of SZSE Component Index and SZSE individual investors * or CNH) northbound and
Small/Mid Cap Innovation Index with market capitalisation Southbound ®® Offshore RMB southbound stock
China Stock connect are RMB
not less than RMB 6bn ®® Qualified mainland investors
Connect 104bn and RMB
®® Most dual-listed A and H shares on SSE or SZSE and SEHK
84bn respectively.
(*ChiNext participation is limited to
Southbound
Two-way Investment
institutional professional investors)
®® All constituent stocks of the Hang Seng Composite LargeCap
Index (“HSLI”) and Hang Seng Composite MidCap Index
(“HSMI”)
®® H-shares in SmallCap index (“HSSI”) with market capitalisation
not less than HKD 5bn
®® Most dual-listed A and H shares on SSE or SZSE and SEHK
®® General equity funds ®® General investors for publicly ®® Offshore RMB/other ®® N/A
Mutual ®® Bond funds offered funds in mainland China currencies
Recognition and offshore markets
®® Mixed funds
of Funds
(MRF) ®® Unlisted index funds
®® Physical index-tracking exchange traded fundsChina capital markets Be prepared to seize the investment opportunities 7
Accessing China’s Bond Markets
CIBM
QFII RQFII Bond Connect
Direct
Onshore Access Offshore Access
Foreign ownership of government bonds Index Inclusion timeline – Bond Market
(% of total market) Bloomberg-Barclays – Estimate inflows of USD 150bn
50% Adding 5% each month
Mar Jan Apr Nov
41%
2018 2019 2019 2020
over 20 months
40%
Inclusion plan Officially 5% 100%
30%
announced confirmed
JPM GBI-EM – Estimate inflows of USD 20bn
20%
16.3% 16.8%
12.7% Adding 1% each month
10% 8.2% Sep Feb Nov
2019 2020 2020
over 10 months
0%
Announced their Begins on the Completed by
US Korea Japan Emerging China
Market
intention to include 28th Feb 2020 30th Nov 2020
China bonds into
Source: Central banks and Treasury websites in respective countries its indexes
Note: EMs % here is average of 17 EM countries ex China, based on end of June 2019 data.
The data for Korea and China correspond to end of July 2019.
For US and Japan, the data are from May 2019 and March 2019 respectively. FTSE Russell WGBI – FTSE Russell did not include China bonds in the WGBI, but will revisit the decision
at the next review in March 2020. Prior estimate suggested that once China bonds
are included, inflows would be USD 150bn.China capital markets Be prepared to seize the investment opportunities 8
Bond Connect: Northbound operating model
Offshore Hong Kong Mainland China
HKEX
Global
Custodian
International BCCL1 Mainland
investors dealers
CFETS
Global
Bond
Existing Access Trading Link Existing
interface Trading interface
Platforms
System
Settlement
Nominee structure
Global CMU HKMA
CCDC + SCH
Members CMU Settlement Link
Custodian
®® International investors trade via global platforms with assets held in custody via a Hong Kong (CMU) nominee structure
Note:
1. Bond Connect Company Limited, jointly owned by CFETS and HKEX, will support and assist admission and registration for Northbound
investors, and liaise closely with the international Access Platforms under Bond Connect Source: HKExChina capital markets Be prepared to seize the investment opportunities 9
Comparison between CIBM and Bond Connect
Bond Connect Northbound CIBM Direct Scheme
Eligibility and Market Entry
Eligible Investors ®® Follow PBOC Notice [2016] No. 3 and Yinfa [2015 No.220 (i.e. same as CIBM ®® PBOC Notice [2016] No.3:
Direct) • Fls including commercial banks, insurance, securities companies, asset
managers
• Other mid-term and long-term institutional
®® Investors accepted by PBOC, such as pension funds, charity funds and endowment
funds etc.
®® Yinfa [2015] No.220: Foreign central banks, international organisations and
sovereign wealth funds
Quota ®® No quota restriction ®® No quota restriction
Market entry/ ®® Investors need to submit the application directly via BCCL, the joint venture ®® Onshore account opening
Registration between HKEx and CFETS set up to support and assist admission for ®® Registration at fund level
Northbound investors ®® Registration process through a Bond Settlement Agent
®® BCCL will submit applications to CFETS, which in turn will submit
documentation to PBOC for filing purposes
®® After receiving a successful filling notification, the CFETS shall open a trading
account in its system and inform the applicant via the BCCL
Investment Scope and Trading
Eligible ®® Cash bonds. The permissible bonds are all types of bonds traded in the CIBM ®® Bond lending & borrowing, Bond forward, Forward Rate Agreement (FRA), Interest
Northbound ®® Investors can participate in the primary market issuance Rate Swap (IRS) ((For Overseas Institutional Investors’ hedging purpose only, while
Securities no restriction for central bank type investors)
®® For overseas RMB clearing banks and participating banks repo is allowed to be
traded
®® QFIIs and RQFIIs are allowed to trade cash bond, bond IPO and interbank deposit
Trading ®® Investors have direct access to CFETS via access platforms (Tradeweb and ®® Investor has trading account with CFETS with own name
arrangement Bloomberg). The trade orders will be routed to the CFETS trading platform. ®® Through CFETS platform
®® Investors can only trade with designated bond Connect mainland dealers ®® Investors trade directly with CFETS members
®® Trading agent to conduct trade on behalf of investors
Trading ®® Trading will be conducted with designated Bond Connect market-makers only ®® Investors trade directly with CFETS members
Arrangement ®® Investors will need to have access to foreign electronic access platform
(TradeWeb is to be used initially for Bond Connect)
Hedging tools ®® CNY FX hedging is available (i.e. CNY FX forward/swap/option) ®® Bond lending, bond forward, IRS, CCS, FRA (for hedging purpose only)
available ®® CNY FX hedging is available (i.e. CNY FX forward/swap/option)
Trading Periods ®® The trading hours are 09:00-12:00 and 13:30-16:30 (Bejing time) on each trading dayChina capital markets Be prepared to seize the investment opportunities 10
Accessing China Equities
QFII RQFII Stock Connect
Onshore Access Offshore Access
% market cap of foreign investors Index Inclusion timeline – Equity Market
MSCI – Inflows could be USD 75bn over the next 2 years counting all funds tracking the index
40%
33% Jun May Aug May Aug Nov
30%
30% 2017 2018 2018 2019 2019 2019
25%
st nd th th
20%
Announced 1 Tranche 2 Tranche 3rd Tranche 4 Tranche 5 Tranche
15%
10%
3.1% FTSE Russell – Initial net passive inflows of USD 10bn
0%
US Korea Japan Emerging China Feb Jun Preliminary Preliminary
Market
2018 2019 Sep Mar
2019 2020
st
Source: PBoC, CSRC, HKEX, JPX, Reuters, US Fed,TWSE,KRX
Announced 1 Tranche FTSE is evaluating FTSE is
st
Note: China, US, HK, Korea, Japan, Taiwan and Brazil data by end of 2018, data of other after the 1 evaluating after
st
regions by end-2016 Tranche the 1 TrancheChina capital markets Be prepared to seize the investment opportunities 11
RMB: Regulatory developments PBOC Notice 159
Summary Documentation
®® PBOC Notice 159: allows offshore RMB ®® Clients are able to use existing ISDA documentation
participating banks to offer onshore deliverable to face offshore RMB participating bank entities for
CNY to offshore investors onshore deliverable CNY*
®® Products in scope: Spot, Forward, FX Swap, Cross ®® Clients sign ‘HSBC’s Letter of Undertaking’ to
Currency Swap and FX Options confirm adherence to ‘real need’ principle and other
®® Access channels in scope: Bond Connect, CIBM, obligations
RQFII, Stock Connect
®® Out of scope: QFII Control/Monitoring
®® All CNY business must conform to ‘real needs’
Benefits to investors principle
®® Reduced currency basis risk for bond investors ®® Offshore RMB participating banks must fulfil obligations
(CNY preferable to CNH) to ensure transactions arise from ‘real needs’
®® Leverage existing offshore legal documentation ®® Ensure RMB business is conducted under principles
(i.e ISDA) for FX derivative products of KYC, due diligence on clients’ activities
®®Ability to execute deliverable CNY with existing ®® Monitoring large transaction flows
offshore counterparty (HSBC GM desks) ®® Derivative transactions must correlate to onshore
®® Third party FX viable* investments
®® Pre-fund of USD with custodian prior to bond ®® Hedge an existing securities position (amount
settlement date not mandatory and tenor)
®® Where securities are sold down, investors must
adjust their hedging to match the new (reduced)
*RQFII and CIBM direct access channel securities positionChina capital markets Be prepared to seize the investment opportunities 12
CNY FX execution by access channel (offshore offering)
Schemes Bond Connect CIBM Direct RQFII Stock Connect QFII
CNY FX ®® Access CNY FX from settlement ®® Access CNY FX from offshore ®® Access CNY FX from ®® Northbound Stock Connect Execution with
execution banks in HK; or RMB participating banks offshore RMB participating investors obtain access to CNY China onshore FX
counterparty ®® Access CNY FX from Offshore (under PBOC 159); or banks (under PBOC 159); or indirectly through ‘Eligible Brokers’ banks -- Not allowed
RMB participating banks ®® Execution with China onshore ®® Execution with China which are: to offer in offshore
(under PBOC 159) FX banks onshore FX banks • Exchange participants of Stock
Exchange of HK (SEHK)
• Clearing participants of the HK
Securities Clearing Company
(HKSCC) which are eligible to
participate in the Northbound
Stock Connect
Documentation Letter of Undertaking Letter of Undertaking Letter of Undertaking Operational model and documentation N/A: out of scope in
to be announced PBOC Circular No. 159
ISDA with offshore RMB ISDA with offshore RMB ISDA with offshore RMB
participating banks participating banks participating banks
Permitted
CNY FX products Products in scope: Spot, Forward, FX Swap, Cross Currency Swap and FX Options
RMB: Onshore deliverable CNY FX execution options
Direct FX Execution* Automated FX Execution
®® Live CNY FX rates executed directly with HSBC offshore trading desks ®® 3 daily execution times
®® Ability to align bond execution, spot and forward FX ®® Pre-agreed margin applied to transparent FX rate
®® Execution within CNY market hours ®® Available for clients using HSBC as Global Custodian
*For CNY FX transactions (both spot and hedging), investors need to ensure it is conducted on genuine need basis
HSBC has the right to review investors’ portfolio and request unwind where necessary
Note: Clients should consult their HSBC local Sales representative for availabilityChina capital markets Be prepared to seize the investment opportunities 13
Why partner with HSBC to access China?
With our global network and in-depth local knowledge, we are uniquely qualified to fulfil the needs of corporate and institutional businesses looking to seize
the huge opportunities within China’s capital markets.
Leading foreign bank in Number 1 Foreign Bank in CIBM Leading bank in Bond Connect
providing China connectivity ®® HSBC is ranked No.1 foreign bank in Bond ®® HSBC China was one of the first Bond Connect
HSBC China has the most banking and investment Settlement Agent (BSA) module (QFII/RQFII/ Participating Dealers and was among the first
related licenses among foreign banks Direct CIBM) and in full CIBM market (as of July 2019) to trade on Bond Connect.
®® HSBC is ranked No.1 in number of clients custody ®® HSBC was recognised as a Top Dealer in 2019 Bond
Connect Awards, out of the 34 participating dealers
at the time.
Significant market share Leading bank in
in Stock Connect QFII and RQFII custody The leading foreign owned
Our combined trading and custody strategy has seen HSBC is the leading onshore custodian bank in the securities company in China
us capture significant Stock Connect market share where QFII and RQFII schemes, with 32.69% and 51.98% of
market share in terms of quota under custody respectively HSBC Qianhai was the 1st majority foreign owned
we hold between 35-40% of the Shanghai Connect shares
(as of July 2019) (as of July 2019) securities company in China. It was named as the ‘China
Emerging Securities Broker’ at the China Best Securities
Companies Award Ceremony in Beijing in 2019.
Leading bank for accessing Strong China-Access
onshore CNY FX directly in local structuring products provider
Highly active in Corporate Access
markets across the globe
®® Investors can gain exposures to China bond ®® Over 120 group and ®® China Discovery
®® Allow our international investors direct access to market by investing in HSBC’s China-Access products. bespoke investor trips Forum with 20
the CNY FX conversion and hedging via their local ®® Vast range of underlyings available, from China to China each year corporates
HSBC entity. government bonds, ABS and Panda bonds ®® Flagship annual ®® Dedicated Corporate
®® Industry leading on providing comprehensive ®® Some product types may provide financing to clients China conference Access team in
CNY FX solutions for all investment schemes such as TRS and Bond Forwards. in Shenzhen with Shenzhen
(CIBM, Bond Connect, RQFII and Stock Connect) 150 corporates
on the back of PBOC159.China capital markets Be prepared to seize the investment opportunities 14
HSBC Qianhai
HSBC partnered with Qianhai Financial Holdings and launched HSBC Qianhai in December 2017. HSBC is the first foreign bank to open a majority-owned joint
venture securities company in mainland China, providing a universal banking platform to our corporate, institutional and commercial banking clients in China
and globally:
®® Investment Banking: Underwriting and sponsoring the issuance of domestic equities, including IPOs, and debt, advising on corporate mergers and acquisitions
®®Securities Brokerage: Broking of listed securities on the Shanghai and Shenzhen Stock Exchanges
Timing
®®Equity Research: Publishing research reports related to A-shares in both English and Chinese simultaneously for distribution to clients globally, which is
a market first.
1. Sharing your 2. Securities brokerage – Helping clients 3. Keeping you informed
strategic vision to access China’s listed securities with Global Research
We start by Providing a range of China securities High quality, award-winning
understanding brokerage services research and analysis
your business By leveraging HSBC’s long-established connectivity to issuers, markets Our analysts are ready to equip you with topical, relevant
We recognise that the world’s and investors, HSBC Qianhai gives you world-class brokerage services, and actionable ideas and commentary. We aim to cover
capital markets are complex and access to China’s exchange traded equity and fixed income markets. over 400 pure A-share companies by the end of 2020,
and highly interconnected, Our broad execution capabilities and strong network can help you with a focus on the higher growth new economy sectors.
and that clients with strategic enhance your market liquidity and efficiency. The research reports will be published in English and
interests in China look to us for Chinese simultaneously and distributed globally, as the
Our range of services includes:
advice and well-established first of their kind. Insights include:
®® Connection to HSBC teams around the world in 80 countries and cash
execution services. ®® Major investment themes
bonds across 50 countries
®® Breaking news
Only by investing the time to ®® Sales coverage on cash equities and bonds
understand your business’s ®® Global views and local ideas
®® Real-time connectivity to the Shanghai and Shenzhen Stock Exchanges
background, strategy, people, ®® Insight on specific opportunities
®® Execution management and update
infrastructure, policies and ®® Strong connections to HSBC’s research network and
procedures we can provide you ®® Research publication
offshore research capabilities
with the bespoke services you ®® Corporate Access services
®® Global research on the macro-economy, foreign
need to achieve your goals.
exchange, stocks and fixed income in existing and
emerging marketsChina capital markets Be prepared to seize the investment opportunities 15
HSBC Qianhai
4. Extensive capabilities in 5. Experience and advice in
underwriting and sponsoring Mergers and Acquisitions (M&A)
A full range of M&A advisory services
Need securities underwriting ®® Holistic financing solutions
We aim to offer M&A advisory services to state-owned and privately owned Chinese
and sponsoring advice? encompassing both the exchange
corporates, multinationals, financial sponsors and sovereign wealth funds.
and interbank markets jointly with
HSBC Qianhai offers a wide Our experienced teams will be able to help you achieve further
other HSBC entities
range of securities underwriting growth and expansion through both domestic, outbound and inbound activities including:
and sponsoring expertise: ®® Facilitation of two-way cross-border
financing ®® Overseas investments ®® Corporate restructurings
®® Primary equity and debt capital ®® M&A transactions
®® Support for domestic issuers to access
markets
the international debt markets We will also work closely with HSBC’s global M&A bankers, sector specialists and
®® Secondary equity offerings
®® Competitive debt financing solutions financing solutions teams to execute complex cross-border transactions.
®® Bespoke structured financing
®® Corporate advisory services:
• Business valuation Require equity capital
Experienced M&A teams with a breadth of knowledge
• Negotiation markets expertise?
• Pricing and structuring ®® Our global M&A business is handled by specialist M&A bankers in nearly 30 countries
Our capabilities in onshore equity
of transactions around the world, including some of the fastest growing emerging markets
issuance complement HSBC’s
leading international banking ®® Product specialists delivering on-the-ground and in-depth insights
platform. This vital piece of our ®® Bankers based in the relevant country or region
Looking to access China’s capital financing services covers a ®® Specialists with relevant industry expertise
debt capital markets? broad range of products including:
If you’re looking to raise funds from ®® Initial public offerings
fixed income instruments, we can help
®® Follow-on offerings
you access China’s huge onshore debt A one-stop M&A solution
capital markets, one of the largest bond ®® Rights, convertible bonds,
markets in the world. We offer: exchangeable bonds, Bringing together our global network and our M&A business provides a one-stop
and preferred shares issues solution which will aim to help Chinese corporates, institutions and multinationals
®® Well-established international bank achieve their M&A ambitions including:
with on-the-ground debt capital
®® Relevant, up-to-date market intelligence
markets teams
®® Access to HSBC’s full suite of global and domestic financing and risk management
productsChina capital markets Be prepared to seize the investment opportunities 16
HSBC’s China Cross-border Business Success
21.33% ⁶
18.42%
8
QDII QDLP
Outbound
Investment ®® USD3.91bn AUC as of Jun 2019 ®® USD432mn AUM as of Jun 2019
®® Won 15 QDII custodian deals in 2019 ®® Active market player for serving QDLPs,
HSS is currently serving 5 clients as of
Jun 2019
Stock
33.38% Mutual
58%
4 5
Bilateral
Connect Recognition
of Funds
®® One of the market leaders in Shanghai/ ®® Acting as Trustee for 11 out of 19 HK
Shenzhen – HK Stock Connect northbound domiciled funds approved for distribution
Inbound since the scheme first launched in 2014 in China under the MRF scheme
and 2016 respectively
Investment ®® Further 10 northbound fund approvals
pending (could reach total AUM > $10bn
in due course)
51.98% 33.14% 32.69% Bond Connect
28%
1 2 3 9
RQFII CIBM QFII (north-trading link)
®® HSS has assisted to obtain the single ®® Facilitated the first overseas financial ®® Acts as QFII custodian to 8 out of 16³ ®® One of the first banks to trade with
largest¹ RQFII quota granted by SAFE institution registered under the new sovereign entities currently investing in overseas institutional investors under
®® Landmark deals: direct access program⁷ as the appointed the China market as of date Bond Connect following its launch
• KAsset Thailand – the first Thailand RQFII settlement agent in 2016 ®® Total approved QFIIs (as of Jun 2019): 312
• Blackrock – the first US RQFII ®® HSBC was the first foreign-invested bank ®® Best QFII Custodian (2014-2018) The
licensed by PBOC to provide integrated Asset Triple A Asset Servicing, Investor
• CIMB-Principal – the first Malaysia RQFII
trading and settlement services in CIBM, and Fund Management Awards
• First RQFII custodian bank in Ireland almost 12 months ahead of others ®® 100% success rate in QFII application
and Japan
Notes: 6. Qualified Domestic Institutional Investor (QDII). The total AUM of all funds under HSBC as custodian (offshore) is used to
1. Market share in terms of total approved RQFII quota as of Jun 2019. Source: SAFE/CSRC website compare with the total AUM of QDII funds custodian in the market (offshore). As of Jun 2019. in terms of services provided by
2. Market share in terms of no. of CIBM clients (excluding foreign central banks, international financial institutions) end of Jul 2019, HBAPSource: Fund Management Company’s website and AMAC’s website (Asset Management Association of China)
per PBOC website 7. Under PBOC Announcement No.3 [2016]. Source of the two bullets under CIBM: HSBC China
3. Market share in terms of No. of QFII as of Jul 2019. Source: SAFE/CSRC websites 8. Qualified Domestic Limited Partnership (QDLP). In terms of number of QDLP clients won. As of Jun 2019. Source: HSBC internal
4. As of Jul 2019, Custody and sovereign wealth funds AUC only, in terms of the services provided by HSBC Securities Direct source and SFO (Shanghai Municipal Government Financial Services Office)
Custody Hong Kong 9. As of date: Jul 2019. Market share in terms of account opening request received by HSBC divided by total number of registered
5. Act as Trustee for 11 out of the 19 HK funds approved to be distributed in China, market share = (11/19) x 100, in terms of the institutional investors under Bond Connect, in terms of the services provided by HSBC Securities Direct Custody Hong Kong.
services provided by HBAP. Source of all figures under Mutual Recognition of Funds: SFC/CSRC websites Source: Bond Connect websiteChina capital markets Be prepared to seize the investment opportunities 17
Key industry awards recognizing HSBC’s strength
Asiamoney Global RMB Poll 2019 Asia Asset Management Best FinanceAsia Achievement Awards 2018
of the Best Awards 2019
®® Best overall global RMB products/services ®® Best Belt and Road Bank
®® Best overall offshore RMB products/services ®® Best RMB Manager
®® Best overall onshore RMB products/services
(all providers)
®® Best RMB in foreign exchange FinanceAsia Country Awards for Euromoney Awards for Excellence 2019
(offshore and onshore)
Achievement 2018
®® Best CNH derivatives (offshore)
®® Hong Kong’s Best Bank
®® Best CNH research and analytics
®® Best International Bank – China ®® Asia’s Best Bank for
(offshore)
Financing
®® Asia’s Best Bank for
Sustainable Finance
FX Week Best Banks Awards 2018
The Asset Triple A Asset Servicing,
Institutional Investor and Insurance
®® Best Bank for the
Awards 2018
Renminbi IFR Awards 2018
®® Best RMB Bank – UK
®® Best RMB Bank – USA ®® Bond House of the Year
®® Best RMB Bank – Germany Asiamoney New Silk Road ®® Asia Bond House of the Year
®® Best RMB Bank – Malaysia Finance Awards 2018
®® Best International Custodian – China
®® Best CIBM Direct Custodian – China ®® Best Research House for BRI
®® Best Subcustodian – China ®® Best Bank for BRI-related financing in the GlobalRMB China Capital
®® Best QFII Custodian – China region – South East Asia Markets Awards 2018
®® Best RQFII Custodian – China ®® Best International Bank in the Region for
BRI – Middle East and Africa
®® Best G3 bond house for Chinese issuerChina capital markets Be prepared to seize the investment opportunities 18 Published: October 2019 For Professional Clients and Eligible Counterparties only. Not for Retail Customers. Issued by HSBC Bank plc 8 Canada Square, London E14 5HQ Authorised the by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority.
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