The first day of China’s new bond link to the rest of the world started yesterday, with little in the way of a market reaction.
The bond connect program with Hong Kong will give offshore investors another way to access China’s US$10 trillion debt market. The system will initially only allow one-way flows to the world’s third-largest bond market.
“The inflows through the bond connect should be minor and the impact on yields should be negligible,” Jason Daw, head of emerging markets strategy at Societe General SA in Singapore, yesterday wrote in note. “Foreigners have been able to invest into Chinese bonds under various schemes in the past.”
Previous moves to opening the country’s interbank bond market to institutional investors have failed to boost foreign holdings of onshore debt.
Overseas institutions’ holdings of Chinese bonds dropped to 830 billion yuan (US$121 billion) as of the end of March, from 853 billion yuan three months earlier, People’s Bank of China data show. That is less than 1.5 percent of 66 trillion yuan of outstanding notes, according to Bloomberg calculations based on the central bank data.
Authorities in Beijing view the connect as another path to internationalizing the country’s currency and further integrating its markets into the global financial system.
The Hong Kong-based asset management arm of Bank of China Ltd said it was the first institution to complete the two bond trades as well as the first onshore yuan spot trade under the bond connect program, according to a statement.
HSBC Holdings Plc, Standard Chartered Plc and Citigroup Inc were among banks announcing they had completed their first deals as market makers in the new system.
Hong Kong Exchanges and Clearing Ltd chief executive officer Charles Li (李小加) said that the company would consider opening a channel into the territory if investors showed an interest.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to