RMB GDR Can Enhance The Liquidity Of Securities

Recently, the Agricultural Bank of China and the London Stock Exchange Group signed a memorandum of understanding on strategic cooperation in cross-border RMB, which established the global depository receipts (GDR) as an important part of future cooperation. Li Zhenjiang, vice president of the Agricultural Bank of China, said at the Beijing IPO conference of the London Stock Exchange Group, "if RMB GDR is successfully launched, it will become the first equity investment product priced in Renminbi and listed overseas."

The so-called "GDR" refers to the listing and trading of the shares of the listed A share listed companies or the stocks that will be IPO through the custody of the domestic banks and overseas depository and issuing. In 1927, in order to facilitate Americans to invest in British stocks, American J.P Morgan invented DR (depository receipts).

Li Zhenjiang believes that the introduction of the RMB GDR is of great significance: first, it is conducive to accelerating the pace of RMB internationalization. If RMB GDR is successfully launched, it will become the first equity investment product denominated in Renminbi and listed overseas, which will help speed up the convertibility of RMB capital account. Two, it is conducive to further opening up China's capital market, to rediscover the value of Chinese stocks, and to enrich the investment varieties of offshore Renminbi. In addition, the introduction of RMB GDR can complement and extend the business of Shanghai and Hong Kong through the introduction of overseas capital and international institutional investors.

In addition to accelerating the internationalization of RMB, the launch of RMB GDR can also expand the issuance and trading market of corporate securities and enhance the liquidity of securities. At the same time, it can enrich investor groups and help maintain and improve securities prices. An analyst at China Merchants Securities told reporters that in essence, depository receipt is a beneficial certificate issued by a depositary bank and a custodian as a co trustee, a foreign issuer as a client and a depositary bank acquiring the ownership of the underlying securities. stay Domestic market The issuance of GDR outside the company can also enhance the company's popularity and provide a more flexible way of financing for enterprises' external investment and mergers and acquisitions.

According to the first half of 2014 issued by New York Mellon released depository receipts report, in the first half of this year, depository receipts financing reached the highest level in three years, of which nearly half raised funds through new depository receipts projects. Chinese Enterprises 。

The analysts said that the legal relationship involved in depository receipts must have foreign related factors. Therefore, the discussion on the jurisdiction and application of depository receipts is a prerequisite for the establishment of RMB GDR by the Agricultural Bank of China and the London Stock Exchange.

"We need to launch RMB. GDR The Agricultural Bank of China will first sign a cooperation contract with the London Stock Exchange. Next, the Agricultural Bank of China should submit the contract to the people's Bank of China, the China Banking Regulatory Commission and the Securities Regulatory Commission for the record. The London Stock Exchange also has to submit contracts to British regulators. Liu Xingcheng, partner of Beijing Zhong Yong law firm yesterday, pointed out in an interview with reporters that "the two sides should reach a consensus on the purpose of cooperation, business scope, business mode, rights and obligations, risk prevention and liability for breach of contract".

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In the overseas non deliverable forward foreign exchange (NDF) market, the US dollar / Renminbi one year variety is newly reported at 6.2355/75, ending on Thursday at 6.2275. The latest offshore dollar / RMB spot report in Hongkong was 6.1382/02, and the last trading day was 6.1382.

Traders said that the majority of disks on the passenger market this week offset the impact of the post purchase purchase of foreign exchange. In the short term, the possibility of appreciation of the renminbi in bilateral fluctuations is large.

In a Reuters interview, one trader said that the first day after the holiday was the purchase of foreign exchange by the UnionPay, and that the oil market was buying foreign exchange on Thursday, but it failed to shake the market. The purchase of oil pan is about ten billion US dollars, and the first two days of US dollar / RMB still go down, and there are many foreign exchange settlement.

Another trader said that this week's settlement strength may also come from Alibaba's overseas IPO settlement.

According to the latest survey, China's exports are expected to resume double-digit growth in September, thanks to the improvement of external demand and the low base level in the same period last year, and the fear of imports is still difficult to pick up, so that the trade surplus will expand and remain near record highs.