[ T H O U G H T
L E A D E R S H I P
|
R E F I N I T I V ]
[ T H O U G H T
L E A D E R S H I P
|
R E F I N I T I V ]
The China
investment
challenge
China poses major investment challenges, despite being
the second most attractive economy for multinationals.
When it comes to using China market data, how can
firms navigate the China Foreign Exchange Trade System
(CFETS) or get the best possible coverage, including
across commodities and ESG?
D
espite the ongoing trade
tensions with the United
States, the first quarter of
2019 saw China’s economy grow at
a steady 6.4% as the pace of indus-
trial production accelerated and
consumer demand improved.
The past year has also seen
President Xi Jinping continue to
demonstrate his commitment to
financial liberalisation.
For example, the recent easing of
restrictions on foreign sharehold-
ing ratios in domestic banks and
financial asset management com-
panies offers new opportunities for
foreign-funded banks to establish
branches and subsidiaries.
For specific markets like com-
modities, the introduction of crude
oil and iron ore futures has served
to open China’s financial sector
further.
16 // TheTrade // Summer 2019
China’s Financial Futures Ex-
change has also relaxed trading
rules by reducing margin require-
ments, cutting fees and allowing
more trading activities.
These recent developments add
further fuel to the decade-long
RMB internationalisation story,
which began in 2009 with the cre-
ation of the dim sum bond market
and expansion of the cross-border
settlement project.
As a result, according to the 2018
World Investment Report, China is
now ranked as the second largest
foreign direct investment recipient
and the second most attractive
economy for multinational compa-
nies, eclipsed in both cases only by
the US.
The China investment challenge
A challenge for those wanting to
Doug Munn, head of
Elektron Real Time, Refinitiv
seize these China opportunities
is that the region has, historically,
been less well served in terms of
both the breadth and depth of mar-
ket coverage and content.
In response, Refinitiv — already
a long-established and leading
provider of information about the
region — now offers wider, deeper
and fully integrated coverage to
help support decisions and realise
the opportunities using China
market data.
The key gateway for those
looking to make investments and
assess opportunities is the China
Foreign Exchange Trading System
(CFETS). Also known as the Na-
tional Interbank Funding Centre, it
is directly affiliated to the People’s
Bank of China.
Despite its name, CFETS extends
well beyond FX to support money,
bond and derivatives markets
trading.
Its services cover issuance, trades,
post-trade processing and bench-
marks. CFETS also provides vital
information ranging from trade
reports and benchmark prices to
yield curves, indices and valuations.
Essentially, whether new to
China, building an existing position
in the region, or a Chinese company
looking to invest abroad, firms will
rely on CFETS and related content
to trade, mark to market and invest,
as well as to manage portfolios and
risk.
Using China market data
It’s clearly vital to not only assim-
ilate all the pricing information
that CFETS generates, but also to
look at the wider economic and
event-driven factors that lie behind
and influence those prices.
As well as providing real-time
and historical data on asset classes
and their derivatives, Refinitiv
offers related content on individual
companies, M&A activity and the
Chinese economy.
Investors can also draw on our
comprehensive information on
company ownership, and individual
officers and directors, as well as up-
to-the minute and archived news
coverage.
All these data sets can be accessed
through Refinitiv’s Eikon platform
or other ‘data feeds’.
Content can be searched and read
online, or fed directly into trading
systems. Fir’s can create greater
value from data feeds by generating
their own analytics or using those
available to drive better decision
making.
As inbound and outbound invest-
ment grows — and trading strat-
egies evolve — the importance of
partnership between investors and
firms holding data and analytics
will only increase.
Issue 60 // TheTradeNews.com // 17