The China investment challenge

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, writes Doug Munn, head of Elektron Real Time at Refinitiv.

Doug Munn, head of Elektron Real Time, Refinitiv

Despite the ongoing trade tensions with the United States, the first quarter of2019 saw China’s economy grow at a steady 6.4% as the pace of industrial 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 shareholding ratios in domestic banks and financial asset management companies offers new opportunities for foreign-funded banks to establish branches and subsidiaries.

For specific markets like commodities, the introduction of crude oil and iron ore futures has served to open China’s financial sector further.

China’s Financial Futures Exchange has also relaxed trading rules by reducing margin requirements, 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 creation 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 companies, eclipsed in both cases only by the US.

The China investment challenge

A challenge for those wanting to seize these China opportunities is that the region has, historically, been less well served in terms of both the breadth and depth of market 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 National 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 benchmarks. 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 assimilate 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 investment  grows — and trading strategies evolve — the importance of partnership between investors and firms holding data and analytics will only increase.