Deutsche Bank-Asia Macro Strategy Notes CCS monitor QA-118966592

T2se3r0Ot6kwoPaT2se3r0Ot6kwoPaDistributed on: 20/11/2025 23:57:22 GMTDistributed on: 20/11/2025 23:57:22 GMT21 November 2025Over the last few weeks, we have received several inquiries concerning the Asia CCS market. In this report, we respond to the three most frequently raised questions, providing our analysis of the prevailing market dynamics.Q1. What's the long-term demand/supply outlook for the CNH CCS market?Excluding speculative investors, four key players shape the CNH CCS market (for tenors of 3Y and above). Our analysis indicates a relatively balanced monthly flow dynamics, as outlined below:nReceive CCS flows - Foreign issuers of Dim Sum bonds: Over the past 12 months, non-Chinese entities have issued an average of CNH 21bn Dim Sum bonds per month. Of these, 40% are offshore subsidiaries of Chinese banks/corporates, while the remaining 60% are "real" foreign entities. Conversations with market participants indicate that the majority of these "real" foreign entities will swap their Dim Sum bond proceeds into other currencies, generating an estimated CNH 10bn in monthly receiving flows.nReceive CCS flows - Foreign corporates borrowing offshore RMB loans: SAFE data shows that Chinese banks' offshore RMB loans have increased by CNH 43bn per month over the last four quarters. Applying the same logic as Dim Sum bond financing, we project around CNH 21bn in monthly receiving flows from these offshore RMB loans.nPay CCS flows - Chinese issuers of USD bonds: Chinese entities issue an average of $3.2bn in USD bonds per month. Assuming a conversion ratio consistent with Chinese exporters (60.9% on average over last 12 months), this translates to approximately CNH 14bn in related pay CCS flows.nPay CCS flows - Foreign corporates undertaking balance sheet (B/S) hedges: US and European MNCs have accumulated an estimated $577 billion in direct investment in China. PWC's Global Treasury Survey indicates that 36% of large-cap companies conduct B/S hedges. Assuming an average hedge tenor of seven years, this activity generates approximately CNH 17bn in monthly paying CCS flows.The aggregate flows above seem to match, with little obvious structural or persistent gap. It's crucial to note though that these flows are driven by diverse factors and exhibit varying seasonality, creating opportunities for speculative players. For instance, B/S hedge activities typically increase when the RMB is weak, whereas Dim Sum bond issuance tends to rise when financial cost savings are Bryant XuStrategist+65-6423 5558Jalaj SinghResearch AssociateDeutsche Bank AG/SingaporeIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Deutsche BankResearch Asia Fixed Income Asia Macro Strategy Notes Date CCS monitor: Q&A21 November 2025Asia Macro Strategy NotesPage 2Deutsche Bank AG/Singaporeattractive.Over the medium term, a