The Belt and Road Initiative (BRI)

  • BRI - London supporting one of the largest geopolitical projects in modern history
  • Connectivity – BRI spans 65 countries, 69% of world’s population
  • Green finance for BRI - LSEG creating the most climate-aligned investment environment in the world

What is the Belt and Road Initiative (BRI)

Proposed by China’s President Xi Jinping in 2013, the Belt and Road Initiative (BRI) is the world’s largest project of connectivity in modern times. Along the Silk Road Economic Belt and the 21st Century Maritime Silk Road, cooperation is focused on policy, infrastructure, trade, financical and people. The “Belt” links China with South East Asia, South Asia, Central Asia, Russia and Europe by land, and the “Road” is a sea route connecting China with South East and South Asia, East Africa and the Middle East.

The initiative touches 65 countries, 69% of world’s population and 29% of world’s economy(1). China’s outbound investment is expected to reach $600-$800 billion over the next five years(2). There is huge opportunity for global investment to enhance the connectivity of the Belt and Road.

London, the most international financial centre in the world, is on hand to facilitate this initiative.

"China has reached a new starting point in its development endeavors. Guided by the vision of innovative, coordinated, green, open and inclusive development, we will adapt to and steer the new normal of economic development and seize opportunities it presents. We will actively promote supply-side structural reform to achieve sustainable development, inject strong impetus into the Belt and Road Initiative and create new opportunities for global development".
- H.E. XI Jinping, President of the People's Republic of China

The Belt and Road Initiative map image

"As China drives forward the Belt and Road initiative from the East, we in Britain are a natural partner in the West, standing ready to work with all partner countries to make a success of this initiative, and delivering the jobs, growth and higher living standards that must be our central ambition for all of our citizens."
–Philip Hammond, Chancellor of the Exchequer, UK


London Stock Exchange Group (LSEG), the global centre of capital raising and leader in green finance, connects market participants along the Belt and Road.

LSEG supports BRI through a variety of services and initiatives:

Infrastructure

  • London Stock Exchange provides world class listing infrastructure for issuers on Belt and Road, with $1.4 trn market valuation in total (3)
  • $80bn equity capital raised
  • $170bn debt capital raised
  • Home to over 480 infrastructure related companies 
  • Over 100 RMB-denominated bonds are listed on London Stock Exchange, including the first ever Chinese sovereign bond listed outside Greater China
  • 11 RQFII ETFs giving direct exposure to China’s equity and debt markets

"London Stock Exchange has played a major role in helping companies on Belt and Road to access international capital traditionally, and we are committed to continue to support growth of this region."
- Nikhil Rathi, CEO, London Stock Exchange plc and Director of International Development, LSEG



Connectivity

  • About 290 companies from 41 sectors and 38 countries on Belt and Road represented
  • A large network and deep expertise of investors and advisers in London for projects along Belt and Road
  • Bank of China, through its Hungarian branch, listed its first Euro- denominated bond on LSE to fund Belt and Road projects
  • Kazakhstan, one of the countries on Belt and Road, has listed 12 companies on LSE with $14.4bn total market capitalisation
  • Astana International Exchange and Astana International Financial Centre have partnered with LSEG Academy on a knowledge sharing programme to build capacity and develop and enforce a solid regulatory framework for privatised companies in Kazakhstan
  • MillenniumIT, a subsidiary of LSEG and leading innovative trading technology business, is based in Sri Lanka, one of the Belt and Road countries

Commenting on the First Euro-denominated bond listed in London by Bank of China, through its Hungary Branch, CHEN Huaiyu, General Manager of the Branch said:
"The success of the bond issued by Bank of China Hungarian Branch shows that international investors have great confidence in the CEE region and also in the ‘One Belt, One Road’ projects initiated by China in this region."



Green

  • Part of City of London Greening the Belt and Road Investors Alliance
  • LSEG Global Sustainable Investment Centre launched 
  • 53 green bonds raising a total of $15bn in 7 different currencies
  • 50 ESG (Environmental, Social & Governance) indices available
  • 13 green funds with an aggregate value of over $5bn

"…the Belt and Road Initiative provides a timely platform for the delivery of green finance to help meet the estimated $22.6 trillion infrastructure funding gap required until 2030 in Asia and the Pacific."
-Dr. MA Jun, Chair, China Green Finance Committee

 
LSEG supports RMB interntionalisation and Chinese listings

Below are some significant listings.

2017 International Finance Corp and Commonwealth Bank of Australia issue two RMB bonds respectively
Jan 2017 GF International Asset Management issues the first fund product launched by a Europe-based wholly Chinese asset manager, tracking the FTSE Global China A Inclusion Index
Nov 2016 Bank of China becomes the first Chinese entity to issue a Green Covered bond
Jun 2016 China Ministry of Finance completes 3 billion RMB bond listing on LSE, its first offshore RMB sovereign bond ever listed outside Greater China
Apr 2016 Hungary becomes the second non-Chinese and the first country from continental Europe to issue a sovereign RMB bond
Dec 2015 ICBC launches its first bond on London Stock Exchange as part of its $10 billion Medium Term Note programme
Oct 2015 Agricultural Bank of China selects London for the first international Green Bond issued by a Chinese bank
Oct 2015 China Construction Bank issues a 1 billion yuan dim sum bond
Oct 2015 China Development Bank issues a 1.56bn dual-currency bond to finance project investments in Europe
Jul 2015 Bank of China, through its Hungarian branch, lists its first Euro denominated bond on LSE as part of a wider bond issuance programme by the bank to provide funding for China’s ‘One Belt, One Road’ projects
Jul 2015 DB x-trackers II Harvest CSI China Sovereign Bond UCITS ETF lists in London, Europe’s first China sovereign bond ETF
Mar 2015 First Chinese Money Market ETF lists in London confirming London’s leading role in continuing RMB internationalisation
Oct 2014 UK Government issues the first non-Chinese sovereign offshore RMB bond
Jun 2014 IFC marks the listing of its first renminbi-denominated green bond. The bond, raised RMB 500 million and is the first green bond issued by a multilateral institution in the offshore Chinese markets


London is in an unrivalled postion to support the financing of the Belt and Road Initiative(4). 

1 Source: “Greening the Belt and Road” http://greenfinanceinitiative.org/wp-content/uploads/2017/10/Greening-th....
2 Source: “China's Belt and Road investments since 2013 total $60 billion: state planner” http://www.reuters.com/article/us-china-silkroad-investment/chinas-belt-....
3 Source: LSE, Factset, Dealogic, October 2017. BRI countries using PROC Government definition: Azerbaijan, Bahrain, Bangladesh, (Greater) China, Czech Republic, Egypt, Georgia, Hungary, India, Indonesia, Iraq, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Malaysia, Mongolia, Myanmar, Oman, Pakistan, Philippines, Poland, Qatar, Romania, Russia, Singapore, Slovakia, Tajikistan, Thailand, Turkey, Ukraine, United Arab Emirates, Vietnam. Data include money raised through IPOs and Further Offers in last 10 years.
4 Source: The Banker Magazine, TheCityUK.co.uk (Key Facts about the UK Fund Management Industry)