An agreement was signed yesterday between mainland China and Macao on trade in goods under the framework of the Closer Economic Partnership Arrangement (CEPA).
China’s private equity funds is now worth 12.79 trillion yuan (US$1.85 trillion) as of end November, according to the Asset Management Association of China (AMAC). The figure records an increase of 0.16% compared to a month earlier. There are 241 more private equity funds compared to the previous month and now the number reaches 75,220. The number of private equity fund managers registered at AMAC increased by 151, reaching 24,418 by late November.
China’s import and export have had solid growth in the first 11 months of 2018. According to the General Administration of Customs, the growth during this period has already surpassed the whole year's growth in 2017. Looking to 2019, experts predicted a continuously narrowing surplus and a growing trade volume next year, noting that the country is expected to see a more balanced trade structure.
Source says that HNA Group will sell its whole payment business which accounts for 900 million yuan (US$130 million). The business has already acquired a third party payment license which is quite hard to get in China nowadays.
China's GDP growth is predicted to be around 6.2% in 2019, according to a research arm of the country's State Council. The country's economic performance might not be as good as this year and the GDP growth is falling back due to the uncertainties such as the Sino-US trade tension.
Southwestern China's Guizhou Province will enhance trade cooperation with countries along the Belt and Road Initiative (BRI), with the total turnover in economic and technological cooperation expected to reach US$1.5 billion by 2020, according to an action plan by the local authority. The plan shows that more cooperation will be carried out in the manufacturing industry and overseas engineering projects.
The Stock Exchange of Hong Kong (HKEX) has reached a consensus with the two bourses in Shanghai and Shenzhen to allow the stocks of companies with dual-class share structure to be traded via the Stock Connect. The dual-class share structure, or the weighted voting rights (WVR) structure, is commonly seen in new tech companies, enabling these companies to issue different classes of shares, granting differently weighted voting rights to shareholders.
This month marks the second anniversary of the launch of Shenzhen-Hong Kong Stock Connect. As of Dec 5, the total turnover through the Connect reached 4.15 trillion yuan (about US$605 billion), according to Shenzhen Stock Exchange. Net money flow through northbound trading (investment from Hong Kong into mainland China, hitting 266.84 billion yuan, and net money flow through southbound trading totalled 156.54 billion yuan, resulting in net capital inflows into the Chinese mainland of 110.3 billion yuan.
Mogujie, a company that runs a Chinese social commerce platform, is said to be listed in the US today. The company plans to issue 4.75 million American depositary receipts, raising US$67 million. Founded in 2011, Mogujie's largest shareholder is Tencent with a 18% stake in the company .
China and Portugal pledged to jointly push forward the construction of the Belt and Road Initiative (BRI) to strengthen Asia-Europe connectivity and boost global trade. The two sides also signed a memorandum of understanding regarding this.
A new draft regulation on Sichuan free trade zone (FTZ) has recently been issued. Foreign interested parties are encouraged to participating in the construction of the FTZ, the regulation says. The new regulation aims to improve Sichuan's trading and business environment and financial service, promoting the opening up of the region.
Alibaba's subsidiary, Hema Supermarket, have recently been reported to reject customers trying to pay with cash. The supermarket requires the customers to use the company's mobile application to pay. People's Bank of China (PBoC) says they will investigate and curb such practices. The regulator has found 602 cases of cash rejection so far.
People's Bank of China, China Securities Regulatory Commission (CSRC) and National Development and Reform Commission have jointly released a notice, naming CSRC as the unified law enforcement agency for the country's bond markets including the inter-bank bond market.
China Development Bank (CDB) has recently issued a dual currency bond offshore. With a total issuance equivalent to US$2.4 billion, this is the single largest issuance of senior notes by Chinese domestic banks in 2018.
Shenzhen is said to be the best place for doing business in China, according to a new report released by the Academy of Greater Bay Area Studies. Shanghai, Guangzhou, Beijing and Chongqing come after Shenzhen. Compared with last year, Shenzhen’s business environment ranking climbed two spots to the first place, while Guangzhou slid to third place from first.
Shanghai has tipped Hong Kong to be the most expensive city regarding luxury consumption on a price-weighted basis, according to a new Julius Baer report. The overall basket of goods and services in the Chinese city rose by 4.8% in US dollar terms. Shanghai is also the most expensive city for six of our index items – hospital accommodation, watch, ladies handbag, wine, jewellery and skin cream.
Detailed rules on China's new board of the technology and innovation sector (科创板) will be rolled out next month, according to a source from the Shanghai Stock Exchange (SSE) talking to Chinese media. The new board will be put into operation before June 2019. The bourse might start accepting listing applications around March or April next year.
Foreign financial institutions are encouraged to be further involved and invest in the wealth management subsidiaries of the commercial banks, according to a new regulation by the China Banking and Insurance Regulatory Commission (CBIRC). Shareholders are encouraged to hold shares in these subsidiaries in the long run. The new regulation aims to further promote the opening up of China’s bank industry.
China and the United States have recently decided to avoid escalation of trade restrictive measures, without further raising existing tariffs imposed on each other and slapping new additional tariffs on other products.
HNA Group recently announces that they will apply for a syndicated loan of 7.5 billion yuan (US$1.08 billion) from seven banks including China Development Bank, Exim Bank of China, ICBC, Agricultural Bank of China, China Construction Bank, Bank of China, and Postal Savings Bank of China. The maturity is three years and the loan aims to stabilize the company's business operations.
Foreign institutional investors will soon be able to trade Chinese bonds in the interbank market through a platform collaborated between Bloomberg terminal system and the China Foreign Exchange Trading System (CFETS), according to the People’s Bank of China (PBoC). The regulator of Hong Kong Exchanges and Clearing Limited (HKEX) says they are also very pleased to welcome Bloomberg and its terminals to Bond Connect, a mutual bond access programme between Hong Kong and Mainland China.
Special banking accounts will be launched in China (Hainan) Pilot Free Trade Zone (FTZ) early next year. In order to better serve the cross-border trading, these accounts integrate local and foreign currency, use renminbi as the base currency. Such banking accounts were first launched in Shanghai FTZ. So far, there are 72,000 such accounts registered in Shanghai.
China and Myanmar have recently pledged to push forward the building of the China-Myanmar Economic Corridor under the Belt and Road Initiative (BRI). The two sides will cooperate in key projects such as the New Yangon city project.
Major cities in the Yangtze River Delta, including Shanghai and cities from Jiangsu and Zhejiang, will form a greater metropolitan circle covering a total population of 65 million. Aiming to become a world-class metropolitan circle, the new plan focus on strengthening the connection of the cities covered. The ongoing Greater Bay Area (GBA) is a similar cooperation project that connects Hong Kong and Macao with nine cities in Guangdong Province.
Qualified individuals in the Free Trade Zones (FTZs) are allowed to invest in overseas securities, according to a recent notice from the State Council regarding the reform and innovation of China's FTZs. The restrictions of foreign investment are further relaxed. In addition, banks in the FTZs are encouraged to provide renminbi loans to foreign institutions and overseas projects.
Shanghai and Singapore authorities have recently announced key areas for closer financial cooperation between the two sides. The areas include financing Belt and Road Initiative (BRI) projects, facilitating international investments into China’s capital markets, and creating an ecosystem for collaboration between financial institutions and fintech firms. Singaporean regulator says these initiatives provide strong support to the growing economic and financial linkages between China and Southeast Asia.
China will set up a specialized mechanism to manage the risk and improve the supervision on systemically important financial institutions, according to the ruling recently issued by the People's Bank of China (PBoC), China Banking and Insurance Regulatory Commission (CBIRC), and China Securities Regulatory Commission (CSRC). The risks facing these institutions could pose a threat to China’s financial system and real economy if they were to encounter any headwinds, according to the regulators.
The Industrial and Commercial Bank of China (ICBC) yesterday announced to set up a wholly owned wealth management subsidiary with a registered capital of up to 16 billion yuan (US$230.6 million). The new unit is allowed to issue public offering funds that directly invest in the equity market. Other banks including Bank of China, Agricultural Bank of China, and China Construction Bank, have also announced setting up such subsidiaries.
Yonghui Superstores has recently announced that it will increase its shareholdings in Yonghui Investment Company to 35%. Together with investments increased by other institutions, the registered capital of Yonghui Investment will be expanded from 50 million yuan (US$7.2 million) to one billion yuan.
Founded in 2001, Yonghui Superstores is a China-based company, principally engaged in the operation of regular chain supermarkets. Tencent has been one of the shareholders of the company since December 2017.
The foreign banks in China will be allowed to apply for more offshore funding and foreign debt quota in 2019, according to a recent notice by China's National Development and Reform Commission (NDRC). This will improve the efficiency of the cross-border funding and optimizing the structure of the foreign debt of these banks. The regulator requires the banks to report on a quarterly basis on certain information of their overseas debt. In addition, NDRC calls for foreign banks to serve China's real economy.
The regulations on the public-private partnerships (PPP) projects are to be issued by the end of 2018, according to China’s Ministry of Finance (MOF). The regulator states that participants need to better understand the concept of PPP projects. Legal regulations will be revised to remove contradictions and problems in the process behind PPPs
China’s first foreign-funded insurance holding company a subsidiary of Allianz has recently been approved for operation, according to the China Banking and Insurance Regulatory Commission (CBIRC). More than 10 applications for market access of foreign-funded banks and insurance institutions are already accepted and approved by CBIRC. The regulator states that China will further promote the opening-up of the financial industry.
China’s Ministry of Commerce (MOC) will reduce the items on the negative list for foreign investment in the Free Trade Zones (FTZs). The regulator states that the establishment of the FTZ is a strategic measure to promote the reform and opening-up in China. More areas are expected to open up to foreign investment.
Foreign institutions will be exempted from the enterprise income tax and value-added tax on the interest income of investing in Chinese bonds, according to China’s Ministry of Finance (MOF) and State Administration of Taxation. This is in response to foreign institutions underweighting Chinese government bonds in October. During the previous 19 consecutive months, foreign institutions have been overweighting the Chinese government bonds. The new measure aims to attract more foreign institutions to invest in the country's bond market.
Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) recently issued consultation papers regarding the guidelines on the trading suspension and resumption of listed companies. The allowed reasons for applying for trading suspension are reduced, the suspension duration allowed for companies with major announcements is shortened, and the information disclosure is emphasized, according to the new rules.
The China (Liaoning) Pilot Free Trade Zone (FTZ) will come out with more measures to improve the overall business environment. The FTZ will focus on reforms, innovation, and opening-up. The FTZ will also enhance the management on market entry to boost trade activities. In addition, it will seek to further serve and participate in the Belt and Road Initiative.
China and the Philippines have recently agreed to call on legislative bodies from two countries to further exchange experience in state governance and push forward multilevel, multiform cooperation for the development of the two nations' bilateral ties. The legislative bodies of the two sides shall support more on practical cooperation, especially in areas including education, culture, and tourism.
Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) both issued new implementation measures on delisting. Companies might be forced to be delisted for violation of certian laws. The delisted companies under this circumstance can apply for resumption of listing five years after the delisting. This time period was extended from one year previously.
China and the Philippines has recently agreed to upgrade their comprehensive strategic cooperation and jointly advance the Belt and Road Initiative (BRI) construction. China says the two countries shall enhance strategic guidance on bilateral relations, promote exchanges on all levels and consolidate strategic mutual trust.
The People's Bank of China (PBoC) has recently cancelled more than 30 payment licenses of the country's third-party payment institutions. The central bank has been tightening its supervision on the third-party payment platforms this year. Chinese analysts say that PBoC's strict supervision will speed up the reform of China’s third-party payment market.
China Securities Regulatory Commission (CSRC) has recently issued the new regulation on the information disclosure regarding listed companies' asset restructuring, tightening the requirement and simplifying the administration process.
Hong Kong and Australia have recently concluded the negotiations on a free trade agreement (FTA) and an investment agreement. The two economies’ trade and investment relationship will be taken to a “new height by this significant milestone, according to the officials from the two sides.
In the past week, the four major Chinese banks, namely Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank have issued multiple measures to support private-owned enterprises fundraising. These acts echo with the recent notices by Chinese regulators on solving issues regarding private-owned enterprises' fundraising.
The Chinese regulator is investigating Didi Chuxing's proposed merger with Uber regarding possible issues of market monopoly. Based in Beijing, Didi Chuxinga Chinese ride-sharing, artificial intelligence and autonomous technology conglomerate.
In order to further the opening-up of the country, nine cities in China’s Yangtze River region, including Shanghai and Hangzhou, have jointly introduced 30 new measures allowing foreign companies to establish or grow their business in the region more conveniently. The new measures include forming a shared network among the nine cities which enables the administration and licensing work for individuals or enterprises in one city can be applied in any of the other eight.
China's real estate market might face more challenges in the fourth quarter of this year. Several measuring criteria on China’s real estate market have been growing slowly or showing a downward trend in the first 10 months in 2018, according to China’s National Bureau of Statistics. However, the real estate enterprises are outperforming the expectations, say Chinese analysts.
Chinese President Xi Jinping calls for Hong Kong and Macao to further develop themselves by embracing the nation’s cause of reform and opening-up. Hong Kong and Macao still hold unique positions, have unique strength and will play an irreplaceable role in reform and opening-up in the new era, Xi says.
The Chinese regulators have been issuing tax reduction measures. As a result, in October, China’s fiscal revenue experienced the first negative growth in 2018, with value-added tax recorded negative growth for the second consecutive month, according to the country's Ministry of Finance (MOF). The regulator states that they will issue more policies to reduce the taxes in order to support the real economy.
Several Chinese securities firms recently announced that their brokerage business serving the Shanghai-London Stock Connect will be launched early next month. The system tests of the Connect will be completed in early December, and more than 10 securities firms have already passed the tests on market making. Chinese analysts believe the Chinese depositary receipts (CDRs) issuance via the Connect will not attract a lot of funds from the A-share which has been underperformed recently.
In order to better serve the Greater Bay Area (GBA), customs regulators from mainland China, Hong Kong and Macau have recently signed a memorandum to deepen the cooperation regarding the custom system of the Hong Kong-Zhuhai-Macao Bridge. The three regulators agree to enhance the interconnectivity among the ports and create more convenience for cross-border logistics.
After Chinese regulators issued new rules on issuing asset management products to defuse the shares pledging risks of listed companies, Chinese securities firms have issued 11 products under this category, providing 22.82 billion yuan (US$3.28 billion) to support listed companies, according to the Asset Management Association of China (AMAC). The qualified asset management plans may get approvals from the AMAC within one working day.
Chinese regulators aim to form a green financing hub in China's Xiongan New Area. Regulators are promoting the development of green finance in the New Area, according to the country's Securities Association of China (SAC). Securities institutions such as investment banks should integrate their resource and support the development if green financing industry in the New Area, according to SAC.
China’s Ministry of Finance (MOF) has recently issued notices on releasing 1.66 trillion yuan (US$239 billion) of funds to local governments, with 26 provinces to be benefitted from this funding. MOF also stated that the money shall be used to adjust citizens’ wages and maintain the public services.
The Singles Day online shopping festival celebrates its 10th anniversary on November 11 this year. This year's Singles Day also marks new sales records, with Taobao's Tmall site hitting the 10 billion-yuan (US$1.44 billion) threshold in two minutes and five seconds after the clock struck midnight and November 11 began. Taobao says it sees "a holistic upgrade across consumption, branding, supply chain and even the manufacturing cycle”, with imported products gaining notable traction among buyers.
Shenwan Hongyuan Securities (Shenwan Hongyuan), a major player in the Chinese securities industry, has recently announced its plan of listing in Hong Kong. Being the twelfth case of A+H share listing, Shenwan Hongyuan will issue no more than 20% of its shares outstanding in the H-share listing. The fund raised from this listing will be used to expand its domestic and overseas business.
The private-owned enterprises will be further supported when participating in the public-private partnerships (PPP) projects, according to a new notice issued by China’s Ministry of Finance (MOF). The state-owned PPP related investment bodies are required to support the PPP projects in areas such as health, culture, technology, elderly care, education, sports and tourism. The notice also calls for support on PPP projects in the western and northeastern China.
China’s National Equities Exchange and Quotations, also known as the “new third board,” has been deepening its reforms. It recently issued new rules on evaluating the market makers participating in this market. The evaluation will be based on the market makes' capacity and abilities in liquidity-providing and pricing. This new rule will be implemented in the first quarter of 2019.
In order to support the fundraising of private-owned enterprises, Chinese regulators will roll out measures to increase the loans issued to the private-owned enterprises in three years. By 2021, the enterprises are expected to have an additional 1.43 trillion yuan (US$206.4 billion) of loans each year.
Chinese regulators are advancing the full circulation of H-shares and the number of companies qualified for the H-share full circulation pilot program will be increased, according to Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC). So far there are 250 Chinese companies listed in Hong Kong and many of them are domestic-oriented stocks which is traded onshore over the counter. The official H-share full circulation plan will be rolled out soon, according to Fang.
Chinese charities are not allowed to participate in eight kinds of investments including trading stocks directly, trading commodities and derivatives directly, and investing in life insurance, according to the new regulation issued by China's Ministry of Civil Affairs. The new rules will be implemented early next year. These rules aim to regulate the investment activity of charities and manage the possible risks.
The global trade tension is becoming increasingly serious, but the growth pace of China’s imports and exports has sped up in October 2018 according to China’s General Administration of Custom (GAC), exceeding the market's expectation. The exports increased by 15.6% y-o-y in October, with import up 21.4% y-o-y. Despite the upbeats, Chinese analysts predict that China's export will still be faced with challenges.
Chinese regulators are discussing the next round of tax reduction measures to be issued by the end of this year. Small and micro enterprises, together with the entrepreneurial firms, might benefit from the new policy, according to Chinese state-owned media.
The new regulation on stock trading suspension and resumption was recently issued by the China Securities Regulatory Commission (CSRC). It is said to be the strictest regulation on stock trading in China to date according to Chinese media. Under the new scheme a listed company cannot apply for stock trading suspension simply because of uncertainties in their business. Meanwhile, the duration of the trading suspension is shortened. Stock exchanges should force the listed companies to resume trading once the companies exceed the allowed period of the suspension. This will enhance the liquidity of the stock market, according to Chinese media.
Chinese e-commerce industry is suffering from slow development. Aibaba, the e-commerce giant has lowered its expectation of the annual income in its second quarterly report of the 2019 fiscal year. The pace of growth in gross merchandise volume of e-commerce enterprises such as JD.com, Netease and Pinduoduo has slowed down. The monetization rate of these e-commerce platforms might also follow the downward trend, which is one of the biggest concerns of investors in the market.
The People's Bank of China (PBoC) calls for enhancing financing tools in loans, bond and equity financing to deal with the issues around Chinese private-owned enterprises fundraising. Qualified financial institutions, ranging from private equity fund managers, securities firms, commercial banks and other asset managers are encouraged to offer fundraising channels to private-owned enterprises, according to PBoC. In the meantime, with the support from PBoC, 30 private-owned enterprises are preparing the issuance of corporate bonds.
Renminbi is not taking a large share in the cross-border settlements, according to China's Ministry of Commerce (MOC). The regulator calls for enhancing the internationalization of the renminbi, increasing the usage of the currency in cross-border settlements. This will provide convenience and cut the cost for Chinese enterprises trading overseas.
Amid the volatility of the Chinese A-share, regulators announced that a new board on the technology innovation sector (科创板) will be launched by Shanghai Stock Exchange (SSE) soon and the registration system is being tested. The new board aims to enhance the financial sector's capability to serve the technology innovation, bringing more capital into the innovative tech enterprises.
In order to curb the risks rising along with the aggressively expanding financial holding companies, new rules on financial holding companies will be issued in the first half of next year, according to the People's Bank of China (PBoC). The central bank has conducted pilot programs regarding the new rules in five Chinese financial institutions, ranging from central state-owned financial holding company, local state-owned financial holding company and financial platforms backed by internet enterprises.
Foreign banks are expanding their business in the Greater Bay Area (GBA), according to the local regulatory body of China Banking and Insurance Regulatory Commission (CBIRC) in Guangdong. Foreign banks who have set up business in regions along the Belt and Road Initiative are more active in expanding into the GBA cities. By the end of September this year, in Guangdong, the number of institutions relating to foreign banks reached 156, accounting for 16% of the total number of China.
The official operational rules on depositary receipts (DRs) issuance via the Shanghai-London Stock Connect has recently been rolled out, according to the Shanghai Stock Exchange (SSE). The new rules cover eight aspects including listing, preliminary reviewing procudures and cross-border conversion. The cross-border conversion is one of the innovation under the Shanghai-London Stock Connect, which allows certain percents of conversions between Chinese DRs and overseas underlying stocks.
China has become the world’s biggest importer of e-commerce goods, with the population of cross-border e-commerce consumers increasing by 10 times over the past three years. The post-90s and post-95s generation consumers have become the largest consumers of imported goods. The penetration rate of China’s cross-border e-commerce retail import, which refers to the proportion of people buying imported goods through cross-border e-commerce platforms, rose from 1.6% in 2014 to 10.2% last year.
“Thinking from an Internet perspective is out of date,” says Robin Li, founder of Baidu. In fact, the three Chinese internet giants, Baidu, Alibaba and Tencent (BAT), have recently said that they will focus more on providing technology service to the real economy. Opportunities are rising in industries such as new manufacturing and industrial internet. Tencent and Baidu have recently formed the cloud service arms to combine internet service with the retail industry. In addition, Alibaba has been developing its cloud computing subsidiary, cooperating with several Chinese listed companies to promote the smart city plans and intelligent manufacturing.
Chinese companies are now allowed to issue directional convertible bonds (定向可转债) as the payment channels during the transactions of their merger and restructuring, according to China Securities Regulatory Commission (CSRC), noting that some companies have issued plans of doing this. Suzhou Secote Precision Electronic is one of them. This company is suspended from trading on the Shanghai Stock Exchange (SSE) since today, preparing for the first issuance of directional convertible bonds. This particular kind of bond aims to support the enterprises such as listed companies to enhance their business through merger and restructuring.
People's Bank of China (PBoC) will issue the first two-tranche central bank bills worth 20 billion yuan (US$2.88 billion) in Hong Kong next week. This is the second time that China issues central bank bills offshore. The maturity for the two-tranche bills is three months and one year respectively. This is considered as one of PBoC’s measures to stabilize the renminbi exchange rate.
A-share has been underperformed, but regulators recently announced that the stamp duty on securities transactions will remain to be 1%. Chines regulators used to cut the stamp duty on securities transactions in the bear market. Such measures usually result in a temporary rally in the stock market, with further declines afterwards. Though the stamp duty stays the same, regulations on fixing the stamp duty is amended to be more flexible.
China is willing to expand cooperation with the Papua New Guinean (PNG) under the Belt and Road Initiative (BRI) in aspects including trade, investment, industrial capacity and education. PNG expressed its support to the BRI, noting that PNG is the first among the Pacific island nations to sign cooperation agreements with China under this initiative.
The number of new loans issued by financial institutions in the Chinese banking industry during the first nine months of this year has reached 13 trillion yuan (US$2.87 billion), according to the China Banking and Insurance Regulatory Commission (CBIRC). In addition to loans, these institutions have also directly and indirectly invested in bonds to support the real economy and private enterprises. Insurance institutions also increased their bond investments, reaching a total value of 5.5 trillion yuan during the same period.
The central State-owned enterprises (SOEs) has been contributing to the Belt and Road Initiative (BRI) development, undertaking 3116 projects so far, which accounts for 50% of the total number of BRI projects. The BRI project contracts that Chinese central SOEs already signed account for over 70% of the total contracts in terms of numbers. These enterprises have been active in areas such as infrastructure construction, energy development and international production capacity cooperation.
Chinese policy bank, Export-Import Bank of China (EXIM Bank), will provide a set of specialized financial services ranging from advisory to fundraising to the exhibited enterprises during the first China International Import Expo (CIIE) to be held on November 11 this year. More than 2800 enterprises from over 130 countries and regions will participate in this event in Shanghai. EXIM Bank aims to sign memorandums of cooperation with seven enterprises including the central state-owned China Chengtong Holdings Group which is equivalent to 20 billion yuan (US$2.87 billion) during the expo.
Ping An Insurance (Group) Company of China plans to repurchase a total of no more than 10% of its publically issued domestic and overseas shares, which is equivalent to a fund of approximately 110 billion yuan (US$15.81 billion). This comes after Chinese regulators announced last week that the rules on share repurchasing will be loosened starting Novermber, an act to stablize the A-share market. Ping An's stock price on A-share declined 5.4% as of closing on yesterday.
Ping An Insurance is a Chinese holding conglomerate whose subsidiaries mainly deal with insurance, banking, and financial services. Founded in 1988, the company is headquartered in Shenzhen.
The People's Insurance Company (Group) of China (PICC Group) has released its prospectus for listing on A-share. The company will issue no more than 1.8 billion shares next week. The PICC Group is also listed on H-share and the company is the fifth case of A+H share. The PICC Group states that the price of its A-share stock will be affected by the company’s stock on H-share. The major insurance stocks on H-share has been declining recently. Founded in 1949, PICC Group has more than 10 subsidiaries, providing insurance and financial service.
In less than a week after China Banking and Insurance Regulatory Commission (CBIRC) announced that Chinese insurance companies are allowed to issue specialized products to defuse the shares pledging risks of list companies under new rules, China Life Insurance Company says it will issue a new product fall under this category, which is also the first of its kind in China. The product aims to attract 20 billion yuan (US$2.87 billion) of funds, investing in the equity and the debt market.
The limitation on the investing category of insurance companies' certain kinds of equity investment is removed, according to a new regulation issued the China Banking and Insurance Regulatory Commission (CBIRC). The insurance companies now can choose to invest in any industry and enterprise according to their needs. CBIRC also indicates that this measure can provide real-economy companies and private enterprises with long-term funds.
Chinese joint-stock companies’ share repurchasing process is simplified according to the amended Article 142 in China’s Company Law. A company do not have to go through the shareholders’ meeting before conducting repurchases. This is considered as one of the measures of Chinese regulators to stablize the A-share market. More than 40 listed companies have shown their intention to conduct share repurchase.
The A-share stocks of consumption sectors such as Chinese liquor (白酒) and home appliances fell again today. The three major Chinese liquor stocks, namely Kweichow Moutai, Wuliangye Yibin and Jiangsu Yanghe Brewery, have been falling and hit its price limit. Kweichow Moutai, in particular, hit its lowest price in the past 12 months.
Regulators have been issuing favourable regulations to stablize the A-share market. However, Chinese analysts say that the collapse of Kweichow Moutai’s stock price indicates that the consumer market in China might continue to underperform, which might further hurt the investors’ confidence in this sector.
Foreign banks now can form wholly foreign-owned banks in mainland China while having branches in the country, according to a new regulation issued by the Chinese Banking and Insurance Regulatory Commission (CBIRC). Foreign banks are also allowed to establish joint venture banks with Chinese entities while having branches in mainland China. In addition, the regulation lowered the minimum amount of a single time deposit that a foreign bank’s Chinese branch can accept.
Yinhua Fund Management, a Chinese investment manager, recently launched a Chinese state-owned enterprise (SOE) exchange-traded fund (ETF) that raised 7.23 billion yuan (US$1.04 billion). So far, there are three SOE ETFs in China, accounting for 50 billion yuan. The issuance of SOE ETFs aims to serve the ongoing SOE reform by attracting funds to the listed SOEs.
The People's Bank of China (PBoC) has been promoting the issuance of corporate bonds in support of private enterprises in China. The central bank recently issued an additional 150 billion yuan (US$21.6 billion) to support small and micro private enterprises. PBoC will soon issue further measures in favour of Chinese private enterprises such as reducing tax.
Alipay, technology giant Alibaba's mobile payment platform, recently introduced a new online health insurance product called "xianghubao" (相互保), a new type of mutual insurance product in China. The product has attracted over 10 million policyholders in about a week. Alipay's operator, Ant Financial says that xianghubao will not replace the critical illness insurance products.
Chines insurance companies are allowed to issue specialized products to defuse the shares pledging risks of list companies, according to a new regulation from China Banking and Insurance Regulatory Commission (CBIRC). The specialized products will provide long-term financing for qualified listed companies and private companies. The specialized products will invest in stocks, publicly issued bonds and exchangeable bonds.
The National Development and Reform Commission (NDRC) has invested 2.5 trillion yuan (US$360 billion) in 1222 projects, covering industries such as transportation, energy, ecological protection and social welfare. These projects aim to attract private capital to participate in public-private partnerships (PPP) projects.
Chinese regulators tightened the rules on selling liquor and tobacco early this week. Therefore, the Chinese liquor (白酒) stocks experienced a sell-off these days. Kweichow Moutai’s stock price lost over 20% compared to the highest price of the year. The stock prices of other Chinese liquors such as Wuliangye, Luzhou Laojiao and Yanghe also dropped.
The total asset of the Chinese central state-owned enterprises (SOEs) is reported to be 183.5 trillion yuan (US$26.4 billion) as of end 2017, according to a recent report by Chinese top officials. The liability of these SOEs recorded 118.5 trillion yuan as of end 2017. The state-owned capital and equity of the Chinese central SOEs reached 50.3 trillion yuan end 2017, while the overseas assets of the central SOEs hit 16.7 trillion yuan. Meanwhile, 10 subsidiaries of the central SOEs and 21 local SOEs are on the list of the new batch of mixed-ownership reform enterprises.
Fifty-seven percent of respondents indicate that their enterprises have formed several strategies regarding the Greater Bay Area (GBA), according to a recent research, noting that the development pace of the GBA in three years will be far ahead of other regions in mainland China. The most favourable industries include technology, innovation, trade, logistics, and financial service.
The opening ceremony of the Hong Kong-Zhuhai-Macau Bridge is held today. The Bridge shorten trips from Hong Kong to Zhuhai and Hong Kong to Macau from four hours to 30 minutes.
Tencent and Hong Kong property developer Sun Hung Kai Properties have formed a strategic partnership recently, aming to enhance smart living means in Hong Kong. Third party payment market in Hong Kong has been dominated by Octopus.
Ministry of Finance (MOF) published the latest report on the local government bond data. As of the end of September, outstanding amount of local government bond is 18.26 trillion yuan. The amount was smaller than the upper limit of 21 trillion yuan, set by MOF.
China Banking and Insurance Regulatory Commission issued a drafted regulation on wealth management products. CBIRC stated that banks should no longer sell wealth management products. Instead, their asset management subsidiaries or other asset management arms can sell the products. The asset management arms will calculate their own profit and loss.
According to Chinese media, due to the recent A-share market selloff, 64 A-share listed companies reached their par value, which is one yuan per share. Shenzhen Stock Exchange states that companies whose share price falls below par value for 20 consecutive days will be delisted from the exchange. Analysts believe that there will be more A-share companies falling below one yuan per share in the future.
According to Chinese media, People's Bank of China (PBoC) is approving more third-party credit evaluation agencies. PBoC is encouraging rating evaluation agencies to collect corporate data from government and government related entities. As of end of September 2018, 124 third party agencies have registered at the PBoC.
China becomes the largest recipient of foreign direct investment (FDI) in the first half of 2018, attracting an estimated US$70 billion worth of inflows. Global FDI fell by 41% during H1 2018.
China’s consumer price index (CPI), a main gauge of inflation, rose 2.5% on year in September, up slightly from the 2.3% in August. China’s producer price index (PPI), which measures costs of goods at the factory gate, rose 3.6% on year in September, down from the 4.1% in August.
With the draft rules recently issued, the preparation for the Shanghai-London Stock Connect is speeding up. Qualified mainland Chinese securities firms can apply for running brokerage business under the Shanghai-London Stock Connect starting from October 27. Institutional investors and individual investors with an asset of more than 3 million yuan in securities are allowed to trade China depositary receipts under the Shanghai-London Stock Connect, according to the draft rules. There are 20 to 30 thousands qualified individual investors in mainland China, according to securities firms.
China's Ministry of Finance (MOF) issued a special fund of 10 billion yuan (US$1.45 billion) to support the country's inclusive finance development. This year's fund recorded an increase of 29.85% compared to 2017's 2.3 billion yuan fund. The regulators will enhance the support for SMEs and agriculture-related enterprises.
Shanghai Stock Exchange has issued a notice, consulting the market on the draft rules of the Shanghai-London Stock Connect regarding business including issuing, listing, trading, cross-border conversion, and supervision. The draft rules also state that only institutional investors and individual investors with an asset of more than 3 million yuan in securities are allowed to trade China depositary receipts (DRs) under the Shanghai-London Stock Connect.
Lai Xiaomin, former chairman of China Huarong Asset Management was expelled from the Communist Party of China (CPC) and removed from public office. Lai has been under investigation since April this year for suspected serious legal and regulatory violations.
China's General Administration of Custom (GAC) says that China’s foreign trade activities have been stable so far this year. Although there is uncertainty out there, the direct and indirect impact of the Sino-US trade tension is manageable.
Hong Kong’s Secretary for Education says the government is negotiating with mainland authorities on setting up schools in Guangdong Province. The schools will apply Hong Kong’s textbooks and education system, with Cantonese being the major teaching language.
China's new taxation regulation will consider adding favorable treatments for overseas residents living in mainland China, according to the country's State Administration of Taxation. Overseas residents living in mainland China for more than one year and less than five years are free from taxation on their overseas income.
Ten major e-commerce enterprises in China pledged to boycott counterfeits and shoddy goods on their platforms. The enterprises, including e-commerce giants Alibaba and JD, said they would neither mislead consumers by false advertisements and product introductions, nor lure, cheat or threaten consumers to change their feedback after online purchases.
There is irrational prosperity in China's blockchain industry, according to an official from the People's Bank of China. The regulator will direct the market to apply the blockchain technology to the real economy.
China is negotiating with 27 countries on signing or upgrading 12 free trade agreements. This year marks the fifth year of the Belt and Road Initiative (BRI). China's trading volume with BRI countries has increased by 12% during the first eight months of this year, taking up 30% of the total trading volume.
The property market in China is showing signs of cooling down in a number of cities. According to China Index Academy, a Chinese property market database, 7,000 square meters of property were sold in Beijing during the National Day holidays from October 1 to 6, down by 19% on year. Shenzhen, China's technology hub and a city of immigrants, has seen a 49% decline on year in property deal transactions.
China’s software and IT sector reported faster growth in both revenue and profit in the first eight months of the year. The sector’s total revenue amounted to 3.95 trillion yuan (US$574.19 billion) in this period, up 14.8% on year, according to the Ministry of Industry and Information Technology (MIIT). Combined profits in the sector stood at 492.4 billion yuan, up 13.7% on year.
The first overseas innovation and entrepreneurship hub registered under a mainland Chinese authority was set up in Macau. The hub aims to enhance the connectivity of Macau and mainland China regarding the innovation and entrepreneurship. The hub also supports local innovations.
From November, Chinese regulator will visit and investigate Internet companies that are suspected of threatening the cyber security.
The sales growth of China's housing market continues to be quite low in September and is expected to be further cooled down given the tightened regulations and capital market fluctuation.
Hong Kong might top the list among global markets in terms of IPO activity by the end of this year, accoridng to PwC HK. The number of newly listed companies increased 46% during the third quarter 2018 compared to last year, raising HK$240 billion (USD$31 billion), up 174% from 2017.
With the launch of the new Guangzhou–Shenzhen–Hong Kong Express Rail Link late last month, more mainland tourists are travelling to Hong Kong during the Golden Week, a seven-day national holiday in mainland China celebrating the country's national day. More than 247,600 mainland tourists visted Hong Kong on the first day of the holiday (Oct 1), up 20% versus the same period last year.
Chinese Foreign Ministry yesterday responded to the second round of the Diplomatic and Security Dialogue with the United States being postponed. After some US media outlets reported that China had proposed the postponement. Chinese Foreign Ministry says that it was the US who proposed putting off the dialogue and the two sides will continue communicating on this issue.
Tencent Music Entertainment, the operator of Chinese major music streaming mobile apps QQ Music, Kuwo and KuGou, filed to go public in the US yesterday. The companiy's total revenues in 2017 stood at US$1.66 billion and is expected to be higher in 2018.
China's Ministry of Finance, State Administration of Taxation, Ministry of Commerce, and General Administration of Customs have issued a new regulation, exempting the export tax on certain e-commerce enterprises.
China Securities Regulatory Commission (CSRC) has issued the revised regulation on listed companies. The new rules tighten the control over shareholders, actual controller and their related parties and emphasize more on protecting SMEs’ rights.
China on Thursday urged the US to put an end to unwarranted accusations and defamation regarding this concern. The country urged the US to stop uttering words and deeds that are harmful to Sino-US relations and the fundamental interests of the two countries' people.
Chinese A-share market is not lacking capital inflows, according to Fang Xinghai, vice chairman of China Securities Regulatory Commission (CSRC). The market is lacking long-term investments and this issue will be solved with the FTSE Russell inclusion of China A-shares in key indices.
The number of the Greater Bay Area (excluding Hong Kong) customers take up 20% of the total Greater China customers of Standard Chartered Bank, according to the senior executives from the newly opened the bank’s branch in Hong Kong West Kowloon railway station. The assets of these customers are normally higher. The number of these customers have been increasing by 10% over the past two years.
After Chinese securities regulators revised the regulation early this month, the first batch of foreign investors in China have recently opened A-share securities accounts. These investors are from the US, Japan, and Australia, many of whom have been in China for years. Most of these investors favor funds tracking pension, automation and robotics industries.
The long-delayed Shanghai-London Stock Connect is expected to be launched this December. The investment threshold of CDR investors is three million yuan (US$0.4 million).
Tencent's QRcode payment method WeChat Pay has launched cross-border payment together with card issuer UnionPay. Hong Kong residents can use WeChat Pay in mainland China without a mainland Chinese bank account. But the transactions are limited to certain online payments for now.
A total of 788.3 billion yuan (US$114.9 billion) worth of investment deals were struck at the 17th Western China International Fair (WCIF). The figure is 12% higher compared to last year's event. The five-day fair, which closed on Sept 24, attracted over 60,000 business executives from 90 countries and regions.
Chinese State Councilor and Foreign Minister Wang Yi said Tuesday that China is committed to developing long-term, healthy and stable relations with the United States.Wang said that China aims to achieve a bilateral relationship featuring "non-conflict, non-confrontation, mutual respect and win-win cooperation" between the two countries.
China published a white paper on Monday to clarify the facts about China-U.S. economic and trade relations, demonstrate its stance on trade friction with the United States, and pursue reasonable solutions.
Loans granted to Chinese small and micro businesses has maintained strong growth as financial institutions pledge more support for the real economy. Outstanding loans to small and micro businesses had grown by 12.6% on year to reach 32.7 trillion yuan (US$4.7 trillion) by the end of August this year, according to the China Banking and Insurance Regulatory Commission.
China and Singapore on Thursday set priorities for future cooperation and agreed to promote cooperation under the Belt and Road Initiative.
China’s first copper options listed on the Shanghai Futures Exchange. Regulations will further discuss possibility and necessity of listing more futures and options.
In order to improve the ESG compliance of Chinese listed companies, The Shanghai Stock Exchange is consulting the public on a draft guidance on ESG complaince. The market is expecting the guidance to be implemented in 2019, but challenges still exist. One of the most focused concern is forming a clear and universal definition; another concern lies in the data transparency regarding ESG reporting, according to speakers at the 2018 Hong Kong Green Finance Forum.
The market share of electric automobiles is expected to reach 30% of China’s total vehicle sales by 2030. The fast-growing momentum is due to technological breakthroughs in fuel cells, the car-sharing economy and the younger generation’s green lifestyle.
Shenzhen yesterday establised a new district, aiming to drive the innovation within the Greater Bat Area. The new district is the nineth district of Shenzhen. It will become "a city of science" with instituions of education, healthcare and innovation to be founded by 2020.
China Securities Depository and Clearing Corporation Limited has reviewed the regulation on the account opening of asset management products. The restrictions on commercial banks investing in securities are relaxed, meaning that there are almost no barriers for commercial banks to invest in equity products including listed funds and stocks.
China will invest 100 billion yuan (US$14.6 billion) to develop digital economy in next five years. The investment will go to projects on big data, internet of things (IoT), cloud computing, smart cities and the digital Silk Road, according to an agreement signed by China Development Bank and the National Development and Reform Commission. The size of China’s digital economy grew to 27.2 trillion yuan last year, up 20.3% y-o-y, accounting for 32.9% of the country’s GDP, according to a report by the Cyberspace Administration of China.
China has pledged to open up further to foreign firms and strengthen protection of intellectual property rights (IPR). Chinese Premier Li Keqiang says today that China will adopt a stricter protection system on IPR. Meanwhile, China is putting in place a slew of opening up measures announced earlier this year and there are more to come with greater intensity and at a higher level, according to Chinese regulators.
People's Bank of China (PBoC) calls for financial institutions to improve their service in terms of the fundraising of private companies. PBoC requires the financial institutions to fairly treat the private comapnies and state-owned enterprises.
Microsoft, Amazon, Alibaba, and several other international tech giants announced to establish AI-related innovation centers and research institutes in Shanghai at the on-going World Artificial Intelligence Conference 2018. Amazon Web Services (AWS), a secure cloud services platform within Amazon.com, announced to establish the AWS AI research institute in Shanghai, the first in Asia-Pacific. Microsoft announced to establish Microsoft Research Asia-Shanghai and the Microsoft-INESA AI Innovation Center in Shanghai.
The Asian Development Bank (ADB) announced that it approved a US$150 million loan to protect a water basin of the Yangtze River. The loan aims to improve flood management, clean water supplies, and ecological conservation in the Longxi River watershed, according to ADB. This is a key project under ADB's new Yangtze River Economic Belt Framework which will provide around US$2 billion over 2018 to 2020 to support the issues of economic and environmental development in the upper and middle reaches of the river.
Shenzhen Stock Exchange says it will roll out supportive measures to attract quality companies from the new economy sector to list on the bourse.
China’s Internet of Things (IoT) market has exceeded one trillion yuan (US$ 145 billion) for the first time with compound annual growth surpassing 25%. The cloud sector is the most competitive market in the country. In addition, smart cities, industrial IoT, internet of vehicles and smart homes have emerged as the four mainstream market segments. China's IoT platform spending is estimated to rank the first globally by 2021.
The 2018 World Artificial Conference kicks off in Shanghai today. China sets up the first service platform to support AI investing and entrepreneurship during the conference. More than 40 AI investing institutions have signed up to be the members of the service platform.
The insurance sector contributes 3.7% of the GDP growth of Hong Kong, according to Paul Chan Mo-po, Financial Secretary of Hong Kong. There are 160 insurance companies and 100,000 Insurance intermediaries in Hong Kong. The Greater Bay Area (GBA) will become a new driver of Hong Kong’s insurance industry, according to Chan, noting that the regulator is discussing with mainland Chinese counterparties to allow Hong Kong insurance companies set up service centers and sell products in the GBA region.
China recently published a guideline stating that the average debt-to-asset ratio of SOEs is required to be reduced by 2% by the end of 2020, as compared with that at the end of 2017. After 2020, the debt-to-asset ratio of SOEs is required to be kept at the average level of companies in the same industry with the same scale, according to the guideline. A clear boundary should be set to separate government debt from corporate debt, with local governments strictly banned from borrowing in the form of corporate debt, according to the guideline.
The Greater Bay Area is trying to improve the cross-boarded logistics utilizing new techs such as the AI. New robot warehouse will be set up in the Area and delivery time for e-commerce business can be reduced to 24 hours within the GBA.
In order to integrate the non-performing assets (NPA) in China's metallurgic industry, China Orient Asset Management has set up a dedicated asset management company with the top three steel enterprises in China, namely China BaoWu Steel Group Corporation, Angang Steel Company and Maanshan Iron and Steel Company. BaoWu Steel holds 37.5% of the new company's shares; China Orient and Angang Steel hold 25% respectively; Maanshan Iron and Steel holds 12.5%
China has been regulating the online P2P market. Fifty illegal fundraising cases have been registered on an online platform managed by Chinese regualtors.Guangdong financial regulators recently issued a notice, requiring online P2P platforms to conduct the self-examination. The platforms are required to report to regulators by October 10 regarding the self-examination and risk-free exit plans, according to the notice.
More than 22,000 Taiwan residents had applied for the new mainland residence permits 10 days after applications opened on Sept 1, according to the State Council. Residents from Hong Kong, Macau and Taiwan who have been living in mainland for a certain period of time can apply for this new card and enjoy similar rights and protection as mainland Chinese residence.
With the Greater Bay Area (GBA) coming into place, more Hong Kong residents born in the 1980s are rushing to acquire properties in mainland China, given the high housing price in Hong Kong. With the new Guangzhou–Shenzhen–Hong Kong Express Rail Link to be launched this month, more Hong Kong residents are considering buying apartments around Shenzhen North station.
Beijing launched a WeChat QR code payment service on more than 5,000 buses in the city’s suburban area. Passengers can search for “Beijing Yikatong” in Chinese on a WeChat mini program and open a service that provides an electronic card. All smartphone users can apply online for free and there is no need to install anything or make a deposit. The service will be promoted in Beijing’s urban areas by the end of this year.
One month after the Chinese regulators gave the green light to pension target securities investment funds, asset management companies such as Zhong Ou Asset Management and Manulife Teda Fund Management are expanding their business in this area. Two pension target securities investment fund products from the two companies are now open to the public. Both products adopt the fund of funds (FoF) structure, with a portfolio that consists of multiple underlying mutual funds and each of those underlying funds having an expense ratio.
Companies listed on China’s A-share market have recorded a surging number of share repurchases, a scheme that analysts say would boost market sentiment. As of yesterday, 482 listed firms have repurchased their shares valued at nearly 24 billion yuan (US$3.5 billion) in total via 655 operations, according to Chinese financial data service provider Wind. The numbers represented sharp increases from 2017, when public companies on the A-share market conducted 565 share buyback operations, with shares worth 9.2 billion yuan repurchased.
Chinese insurers have issued 2.23 trillion yuan of bond and equity investment plans as of end July 2018, according to Insurance Asset Management Association of China. To support the real economy, these investments are expected to go towards national strategies such as the Belt and Road, Yangtze River Economic Zone, Coordinated Development for the Beijing-Tianjin-Hebei Region, and Renovation of Shanty Areas.
Haidilao, a popular Chinese hotpot chain will conduct its IPO this month in Hong Kong, aiming to raise HK$75.7 billion (US$963 million). It has attracted cornerstone investors including Hillhouse Capital and Morgan Stanley. The company will issue 424.53 million shares at a price range between HK$14.8 and HK$17.8, with minimum subscription fee standing at HK$17,979.37, which is one of the highest among new stocks on H-share.
With Chinese regulators cracking down on the real estate market, it is hard for the housing sector to maintain a “golden September and silver October” this year, meaning that the market might not be able to be as active as it used to be in September and October each year. The real estate market is still growing but Chinese analysts predict that it will be stabilizing especially in second and third tier cities.
Chinese securities firms have seen a drop in profitability in August 2018 due to underperforming primary and secondary markets. Among 28 listed securities companies, only one firm achieved both positive growth in revenue and net profit. Citic Securities, Guotai Junan and Shenwan Hongyuan are the top three securities firm in terms of revenue.
The world largest screen maker BOE Technology Group reported a decline in its revenue and profit in its semi-annual report. The market capitalization also dropped by 80 billion yuan over the past eight months. BOE explains that the underperformance was attributed to overall falling price and the oversupply of the screen market.
Ministry of Commerce (MOC) has signed a cooperation framework agreement with Hainan Province, aiming to enhance the opening up of Hainan Province. MOC will support Hainan regarding the construction of the free trade zone, attracting foreign investment, and innovation in the supply chain, foreign trade and foreign investment.
The copper options to be listed in the Shanghai Futures Exchange will apply the market maker system, according to an announcement by Shanghai Futures Exchange. Eighteen securities companies including CITIC Securities, Western Securities, and CMSC are qualified as market makers.
Guangzhou issues a proposal for further opening up and improving its international financial capabilities. The Greater Bay Area city will relax the restrictions on foreign investors, lower the threshold for Hong Kong and Macao financial institutions entering Guangzhou, support foreign investment to participate in the development of Guangzhou, according to the proposal.
Chinese tech giants Tencent says they are discussing with the regulator about allowing a certain amount of exchange between Hong Kong dollar and Chinese yuan within WeChat Pay. Tencent’s WeChat Pay built in the social networking mobile application WeChat, together Alipay, are the most used mobile payment applications in mainland China. So far, Hong Kong residents have to open a Chinese account before they can use WeChat Pay in mainland China. Mainland Chinese residents, however, can use Alipay linked to Chinese bank accounts in Hong Kong.
Eight central state-owned enterprises (SOEs) have finished their mixed-ownership reforms, getting a total investment of 90 billion yuan private capital coming from more than 40 investors, according to National Development and Reform Commission (NDRC). There are altogether 50 SOEs undergoing mixed-ownership reforms.
A new Greater Bay Area (GBA) blockchain platform for trade finance was launched yesterday in Shenzhen for testing. The platform aims to form a financial ecosystem in the GBA, providing services in the trade finance space. Enterprises can use the platform to manage receivables, fundraising and other activities. Initiated by People’s Bank of China, the platform is developed by a Shenzhen finance research institution, BYD, and banks including Bank of China, China Construction Bank, China Merchants Bank, Ping An Bank and Standard Chartered Bank.
The long-delayed Shanghai-London Stock Connect Mechanism is taking shape as the Chinese regulators started to collect public opinions on the proposed mechanism. Meanwhile, some Chinese securities companies have submitted their application for market maker licenses under this mechanism. This is a further step in connecting the Chinese mainland and international capital markets.
The recent years have seen increased cooperation between insurance companies and P2P platforms. Chinese insurance companies with non-life business recently have received notice from regulators requiring them to report their business in the P2P space. This act will further reduce the potential risks in this industry, according to the notice.
Hong Kong insurance authority is discussing with mainland counterparties regarding “Insurance Connect” under the Greater Bay Area (GBA) framework, but Hong Kong analysts are not very positive on this issue, according to local media. Insurance is considered as the weakest sector among all the financial sectors in Hong Kong. The one well-performed sector is life insurance in which a lot of mainland Chinese clients play an important role.
China Banking Insurance Regulatory Commission (CBIRC) has issued notice on commercial banks underwriting local government bonds. The cashing of the local government bonds will be undertaken by the provincial level governments rather than the previous Ministry of Finance.
China set up a 50 billion yuan (US$7.31 billion) fund to support the development of the integrated circuit industry in Chongqing. Being one of the first cities to develop integrated circuit industry, Chongqing now has 20 enterprises in this industry, covering business in integrated circuit designing, manufacturing and packaging. The fund will provide subsidized loans to the integrated circuit projects that have an actual investment ranging from over 20 million yuan to over 500 million yuan.
China's largest 500 companies have generated a combined revenue of 71.17 trillion yuan (US$10.44 trillion) in 2017, up 11.2% from the year before, according to the new list of China's top 500 enterprises, jointly published by the China Enterprise Confederation (CEC) and China Enterprise Directors Association. These enterprises’ combined net profits amounted to 3.2 trillion yuan in 2017, up 13.28% from a year earlier. State Grid is the biggest Chinese company, with an operating revenue of 2.36 trillion yuan. China Petrochemical Corporation, and China National Petroleum Corporation come after State Grid.
China’s top legislators have recently passed an e-commerce law to improve the regulation environment. The law, which is set to “protect legal rights and interests of all parties” and “maintain the market order,” requires all e-commerce operators to fulfill their obligations to protect consumers’ rights and interests as well as personal information, intellectual property rights (IPR) and cyberspace security. The new law covers aspects of operators, contracts, disputes settlement and liabilities involved in e-commerce as well as the market development.
Greater Bay Area (GBA) is expected to become the world’s largest bay area economy, according to a recent report from commercial real estate services and investment firm CBRE Group, noting that the GBA’s GDP is taking 12% of China’s total GDP and this figure is higher than that of New York Bay and San Francisco Bay. Regulators of the GBA cities will cooperate to simplify the procedures for Hong Kong residents opening mainland Chinese bank accounts, according to Chief Executive of Hong Kong Carrie Lam Cheng Yuet-ngor. Interested parties are discussing to allow Hong Kong mobile payments to be used in mainland China, she adds. On the other hand, Bank of China’s GBA credit cards which was launched early this year has 200,000 users so far.
The first batch of applications for Hong Kong virtual banking licenses close today and more than 70 institutions have shown their interests, according to Hong Kong Monetary Authority (HKMA). Bank of China (Hong Kong), Standard Chartered Hong Kong, Bank of East Asia, Ping An Insurance, Tencent, Ant Financial Services Group has already submitted their application and some of them are cooperating with local entities to set up joint ventures for virtual bank business. Virtual banking will start with business in cross-border payments, micro-loan and wealth management. Hong Kong analysts say that local authorities will speed up the implementation of the eID at the same time.
The Shanghai Fuxing Group scandal is one of the biggest scandals hitting China’s 12.6 trillion yuan (US$1.84 trillion) hedge fund sector. The group's chairman, Zhu Yidong, is accused of manipulating the stock market and putting the 35 billion yuan Shanghai-based hedge fund at risk. Zhu escaped to overseas before he was arrested and sent back to mainland China last night.
China’s nonfinancial outbound direct investment (ODI) will rise in the second half of this year on strong global economic growth, says Zhao Ping, director of the international trade research department under the aegis of the Academy of China Council for the Promotion of International Trade, noting that the China-US trade tensions may hinder the rise of ODI to some degree but not much. In the first seven months of the year, China’s nonfinancial ODI surged by 14.1% y-o-y to US$65.27 billion. Last year, China’s ODI stood at US$124.63 billion, ranking the third globally.
A newly launched social networking mobile application called Bullet Message (子弹短信) has finished Series A funding of 150 million yuan (US$ 21.95 million) seven days after it was first launched on August 20, with 51 venture capitals and seven tech companies investing. Bullet Message is now worth 600 million yuan after the funding, according to Chinese media. With its voice recognition function, the app is expected to break the market dominance of WeChat in mainland China.
Bullet Message is developed by Beijing Kuairu Techonology (北京快如科技) using technology from iFlytek. Founded in 1999, iFlytek is a Chinese information technology company listed in Shenzhen. The company creates voice recognition software and other voice-based internet or mobile products covering education, communication, music, intelligent toys industries.
Guangdong has issued a new proposal to support the innovation in its free trade pilot zone. A proposed “free trade connect” scheme within the Greater Bay Area (GBA) is also included. It calls for support and innovation in the international transshipment. The proposal also suggests to innovate and improve the Stock Connect and Bond Connect. It also suggest setting up a regional equity market in Guangdong and bringing in overseas investment institutions to participate the market. The proposal also calls for setting up offshore renminbi funds for investment and fundraising.
China has been Africa's largest trading partner for nine years in a row as major cooperation programs boosted bilateral trade. In the first half of 2018, bilateral trade rose 16% y-o-y to US$98.8 billion dollars. The trade between the two parties has been growing since the launch of 10 major cooperation plans three years ago at the Johannesburg summit of the Forum on China-Africa Cooperation (FOCAC) in 2015. This year, the FOCAC will be held in Beijing in early September.
Chinese and Greek foreign ministers have signed a Memorandum of Understanding (MOU) to jointly advance the construction of the Belt and Road. The MOU will inject strong and long-lasting impetus into the pragmatic cooperation between the two countries, according to the Chinese State Council.
Approved by China Securities Regulatory Commission (CSRC), the mainland China’s first pension target securities investment fund is issued by China Asset Management (China AMC) today. The fund is a hybrid fund of fund (FoF), and the target date of it is 2040, with holding period of three years. Early this month, 14 funds of the same kind got approvals and more are to be issued in September.
The tariff and law should not be unified within the Greater Bay Area (GBA), says Huang Qifan, deputy chairman of the economic and finance committee under the National People’s Congress. The three different tariff, law and currency systems make the GBA special, showing its potential and energy, says Huang, noting that this provides more choices and opportunities for the industrial cooperation. Eliminating the advantages in the different systems might lead to more competition rather than cooperation among the GBA cities.
The Belt and Road (B&R) projects have brought investment to the B&R countries rather than the so-called debt trap, Ning Jizhe, chief of the National Bureau of Statistics and deputy head of the National Development and Reform Commission says. "The debt issues of some countries are not necessarily connected with the Belt and Road construction and relevant projects," says Ning. These Belt and Road construction projects have gone through feasibility studies and strict loan reviews, with binding requirements on the proportion of property investment to total investment, asset-liability ratio and capital return, he adds.
The Greater Bay Area (GBA) is showing its potential business opportunity with a population of 70 billion. Analysts say that with the GBA cities further integrating, chances are that the regulators might break the barriers of the cross-border sales of financial products. Local media reported that a few companies had already applied for setting up virtual banks which is one of the upcoming trends in Hong Kong. In general, sectors including finance, technology and real estate are attracting most attention, according to analysts.
MTR Corporation Limited is considering including payment methods such as credit cards and Apple Pay in addition to the existing Octopus, QR Code, and Samsung Pay. Open payment is the trend across different industries globally, according to Sunny Cheung, CEO of Octopus Cards Limited, noting that what MTR is considering might impact his company. MTR Corporation Limited is the parent company of Octopus Cards Limited, holding 57.4% of its shares. About 95% of the Hong Kong residents are still using Octopus or cash, with only 20% of them using mobile payments and 53% using credit cards, according to the Hong Kong Productivity Council.
China's Supreme People's Court (SPC) has launched the International Commercial Expert Committee (ICEC), with a membership of 32 domestic and foreign experts. The ICEC supports the settlement of international commercial disputes through mediation, arbitration and lawsuits, according to the SPC. Coming from different legal systems and jurisdictions, the first batch of committee members includes leaders of international organizations, legal experts and scholars, and experienced judges and lawyers.
The Greater Bay Area cities will be further integrated. China has issued a new policy, stating that Hong Kong, Macao and Taiwan residents can start applying for the new smart cards from September 1 to enjoy the same rights as their mainland Chinese counterparts in accessing 18 types of schemes and services including financial services in banking, insurance, securities and futures. This policy will apply to more than 500,000 Hong Kong residents living and studying across the border, says Chief Executive Carrie Lam. Another one-off permit which will allow Hong Kong drivers to use own cars in Guangdong directly without any mainland Chinese registration plate is under the consideration of authorities.
National Development and Reform Commission (NDRC) will enhance the infrastructure and regulations regarding industrial innovation. In this regard, a batch of industrial innovation centers will be launched in Beijing, Shanghai and the Greater Bay Area. This is part of China’s strategy of industrial upgrading.
The Australian government has issued an order to expand its security regulations on the 5G network, which will block Chinese telecom equipment producers from the Australian market. China's Ministry of Commerce (MOC) expressed serious concern about 5G security rules published by the Australian government, calling the move "a wrong decision". The rules will exert a negative influence on the interest of both Chinese and Australian companies, says MOC.
China has shut down most of the initial coin offering (ICO) platforms, bringing down the global market share of renminbi ICO trading to less than 5% from the previous 90%. However, some of the ICO platforms are trying to return to the market recently. The regulators, at the same time, shut down a number of Chinese WeChat public accounts about ICO these days, noting that China will continue to crack down ICO activities.
The value of China mergers and acquisitions (M&A) dropped 18% to US$348 billion in the first six months of the year, and the M&A expects a further moderate decline in the second half of this year. In 1H 2018, deal values fell across the four main sub-sectors of M&As: domestic strategic buyers, foreign strategic buyers, private equity deals and Chinese mainland outbound. The outbound M&As declined for four consecutive half-year periods since 2016.
Shenzhen Stock Exchange has signed a cooperation agreement with Xinjiang authority to improve the capital market service in the region. The Exchange will use financing tools such as IPO, refinancing, M&A, local bonds, corporate bonds, and ABS, to help boost the development of the enterprises in the region. With the advantages in traffic, resource and tourism, the economy in the region is expected to surge with the support from the Exchange.
China’s major nonferrous companies experienced a profitability surge in the first half of 2018, with analysts forecasting that the industry is likely to remain promising throughout the year. The strong half-year performance was mainly driven by ongoing supply-side reforms boosting product prices and deepening state-owned enterprise (SOEs) reforms, analysts say. The supply-side reforms are closely integrated with the SOEs’ deepening reforms, such as technological transformation and corporate restructuring, which are contributing to the industry’s overall performance.
Chinese state-owned media reported that regulations on deleveraging will be rolled out during the second half of this year. National Development and Reform Commission (NDRC) says that the regulators have a clear timeline for deleveraging. Regulators will issue new rules supporting capital market operations relating to the debt-to-equity swap such as IPOs, private placements and convertible bonds.
Chinese regulators have been issuing new rules to support the development of the private sector. New regulations on the public-private partnership (PPP) will be issued by the end of this year. Chinese private sector already shows its potential. Among the 19 provinces that release their investment data as of July this year, eight of them outpaced the country’s average private investment growth.
China and El Salvador have signed a joint communique in establishing diplomatic relations. "The two governments agree to develop friendly relations between the two countries on the basis of the principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality, mutual benefit and peaceful coexistence. El Salvador cut diplomatic ties with Taiwan, and will no longer have any official relations or any official exchanges with Taiwan in any form.
With more regulation supporting the development of the healthcare industry in China, a new investment trend comes out in the child healthcare sector. By 2020, the health market in China will reach 80 trillion yuan (US$11.63 trillion), according to Chinese researching companies.
Chinese media predicts that there will be a boom in this sector, with major players such as Honz Pharmaceutical actively doing mergers and acquisitions. In June, July and August, the company acquired two hospitals and one home products company. Listed in Shenzhen, Honz Pharmaceutical was first set up in 1994 and entered the child health care market in 2002.
Local banking regulators in cities including Shanghai, Tianjin, Jiangsu, Zhejiang, and Fujian have been issuing notices to ban the new issuance of real estate trusts, according to Chinese media. In the first seven months of this year, the issuance of real estate trust has increase 80% y-o0-y. The regulators’ act aims to slow down the financing of the real estate industry.
Overseas investors pumped in 161.6 billion yuan (US$23.4 billion) into A-shares in the first seven months this year, according to Gao Li, spokesperson of the China Securities Regulatory Commission (CSRC). The corresponding figure for last year was 118.9 billion yuan, suggesting that foreign investments rose about 36% y-o-y. A-share companies’ profitability continues to increase since the beginning of this year, indicating their stocks may be good investment options, according to Gao.
On August 17, China's two year government bond futures was made available for trading. At the ceremony of the new futures, Xinghai Fang, vice chairman of China Securities Regulatory Commission (CSRC) said that commercial banks and insurance companies will be allowed to participate in the government bond futures market soon. In addition, CSRC is also speeding up the launch of new futures and options products on China government bonds with different tenors.
Shanghai Stock Exchange made an announcement that it will implement a new closing auction session starting from August 20. The auction period will be from 14:57 to 15:00 and the closing auction session will be similar as Hong Kong Stock Exchange. Noticeably, orders during the closing auctions cannot be cancelled.
National Association of Financial Market Institutional Investors (NAFMII) issued a warning notice to Dagong Global Credit Rating, one of major Chinese credit rating agencies. According to NAFMII, Dagong illegally provided consultancy services directly to issuers and misstatement and fraud were discovered in the documents submitted to NAFMII. As a result, NAFMII suspended Dagong's credit rating business on debt financing instruments for one year.
According to Chinese media, China Banking and Insurance Regulatory Commission (CBIRC) had a close-door meeting with China's big four asset management companies, Huarong, Orient, Great Wall and Cinda. CBIRC asked the big four firms to acquire high risk assets from P2P companies to give comfort and confidence to investors. In the past, the big four asset management companies lacked the motivation to work with P2P companies.
China Securities Regulatory Commission recently allowed all foreign citizens working in China to open A-share accounts. The rules will be effective on September 15. In the past, only foreign employees participating in employee stock option plan were able to open A-share accounts.
According to Chinese media, Shouwen Wang, vice minister of Ministry of Commerce, received an invitation from US for a trade talk in late August. China reiterated that it would not accept protectionism.
Ministry of Finance issued a notice stating that it will speed up the approval of China's local government project bonds. The notice also sets a minimum issuance amount and says that there will not be a ceiling of the maximum issuance for each month. The notice also states that the information disclosure procedure will be simplified.
In a press conference of NDRC, a spokesperson says that the impact from US trade tension on Chinese economy is limited. According to NDRC, China will have an expansionary fiscal policy and a stable monetary policy. In the meantime, deleveraging will still be a core issue to be solved in the future.
About 40% of the young Chinese entrepreneurs are female, according to a survey report jointly published by the China Foundation for Youth Entrepreneurship and Employment and the Chinese Academy of Labour and Social Security. Nearly 70% of the surveyed entrepreneurs are over 25 years old, and 63% of the respondents run business in the service industry, according to the report. Under preferential policies, people from all walks of life are becoming entrepreneurs, but college students remain the majority, the report says, noting that 55% of the respondents were college students before starting their business.
China Securities Regulatory Commission (CSRC) recently issued several notices on banning certain senior executives from entering the capital market, as they are found to manipulate the stocks. Zhu Yidong, CEO of Fuxing Group is banned for three years and Gao Yong, a partner at a Chinese asset management company（北京护城河投资发展中心）is banned for life. The regulator confiscated 1.8 billion yuan (US$260 million) of asset from Gao in his case and Chinese actor Huang Xiaoming is also involved. Huang has 48 companies under his name and 14 of them are investment companies.
China has recently set up a researching and developing (R&D) center for financial security utilizing technologies such as big data. Based in Beijing, the center was organized by the National Development and Reform Commission (NDRC), together with financial security researching arms of Ping An of China and tech company Qihoo. The center aims to improve the security technology of the financial industry, with a focus on the surging fintech sector.
FDI into the Chinese mainland rose 4.1% y-o-y to US$68.32 billion in the first six months of 2018, according to the Ministry of Commerce. “Looking at the data for the first half of the year (H1), foreign investors maintained their enthusiasm in the Chinese market,” said Huo Jianguo, vice-chairman of the China Society for WTO Studies. The number of overseas-funded companies newly founded in mainland China during the first half of 2018 surged 96.6% y-o-y to 29,591.
There are 176 replacements among the senior executives from 42 Chinese central state-owned enterprises (SOEs) during the first half of 2018. This indicates that the SOE reform will be deepened in the next few months, according to Chinese analysts. With nine central SOEs setting up their boards of directors in H1 2018, nearly all of the Chinese central SOEs have this structure now.
China Southern Power Grid (CSG) has signed a Memorandum of Understanding (MOU) over feasibility study on cooperatively developing and building Laos' national power grid in the Lao capital Vientiane. According to the MOU, CSG will cooperate with the Lao side, with combined advantages and mutual benefits, to build a national integrated backbone power grid as to improve power transmission capacity and electricity supply reliability in Laos, and support the country's sustainable socio-economic development. CSG also donated 1.2 billion kip (US$142,000) to the Lao government at the signing ceremony.
The Shanghai Stock Exchange recently mentioned that it will not accept scenarios such as a change of a company’s board of directors as a valid reason to temporarily suspend shares on the exchange. The exchange is expected to place greater emphasis on the rationale behind a listed company’s action to suspend its shares. As of August 9, the number of temporarily suspended companies listed on Shanghai Stock Exchange was reduced to 45, accounting for 3.1% of all the Shanghai-listed companies.
China’s cross-border delivery volume is growing rapidly; meanwhile, the cross-border express delivery service capacity is also gradually strengthening. SF Express, one of the largest express delivery companies in China, has recently opened a direct route of full-cargo flights from Shenzhen to Chennai, India. The company has already opened flight routes to Osaka, Hanoi, Phnom Penh and Dhaka. Its international express delivery service has covered the United States, the European Union, Russia, Japan and Malaysia among 53 countries and regions.
China has decided to impose additional tariffs on imported products from the US worth about US$16 billion, according to the Customs Tariff Commission of the State Council of China. The regulator decided to impose additional duties of 25% on these products, taking effect on Aug 23, 2018. It is totally unreasonable for the United States to put domestic laws above international laws time and time again, according to China's Ministry of Commerce, adding that China was forced to take necessary countermeasures to defend its legitimate rights and interests and the multilateral trade system.
State Power Investment Corporation was approved to issue a 26 billion yuan corporate bond, becoming the first issuance utilizing a shelf offering structure on Shanghai Stock Exchange. Companies can apply to issue corporate bonds, green corporate bonds, poverty alleviation corporate bonds, exchangeable corporate bond, and renewable corporate bonds.
Chinese pension target securities investment funds will increase 300 to 400 billion yuan of investment each year, according to a source talking to Chinese media Securities Daily. Investors with long-term and stable strategies will choose Chinese pension target securities investment funds, making it one of the major asset classes in the Chinese market. Chinese major fund houses such as China Asset Management, Lombarda China Fund Management, and China Southern Fund Management have got their approvals of issuing the pension target securities investment funds.
Despite the trade tension, China's goods trade went up by 8.6% y-o-y to 16.72 trillion yuan (US$ 2.45 trillion) in the first seven months of this year, according to the General Administration of Customs of China. Exports rose 5% y-o-y in January to July while imports grew 12.9%, resulting in a trade surplus of 1.06 trillion yuan, which narrowed by 30.6%, according to the General Administration of Customs.
China will further reduce the risks of internet finance and P2P lending. Chinese financial regulators have been organizing industry investigations and urging leading internet platforms to undertake self-inspection to find and fix problems. Regulators will guide unqualified P2P lending platforms exit the market and dealing with their assets and debts in a market-oriented way based on legal principles to protect the interests of investors. Illegal internet lending platforms and borrowers with malicious defaults will be subject to strict punishment.
The Belt and Road Initiative (B&R) has turned China’s inland areas into the frontline of the country’s opening up. Many of the inland provinces have seen faster trade growth with B&R countries compared with their overall trade growth. Hunan province in China saw a 53.9% rise in trade with B&R countries compared with its total trade growth of 31.7%. Northwest China’s Gansu province experienced a similar boost in trade with B&R countries which expanded 41%, slightly faster than its overall growth.
Despite the Sino-US trade tension, China’s domestic bond market is expected to remain appealing to overseas capital as the amount of bonds held by overseas investors has increased drastically since last year, and the Chinese government steps up its efforts to liberalize the domestic market. Foreign holdings have increased for the past 17 consecutive months, with the value of outstanding bonds at 1.35 trillion yuan (US$197.1 billion) by the end of July, up by 60.9% compared to the same period of last year, according to China Central Depository and Clearing Co.
The People's Bank of China (PBoC) has announced early last month that new rules on panda bonds will soon be implemented. The new rules will provide a clearer guidance to overseas issuers and improve the Bond Connect. This news helps to further boost the market. As of end July this year, the issuance of the 36 panda bonds reached 59 billion yuan, surpassing last year’s issuance during the same period by 80%. The issuance of panda bonds is expected to exceed 100 billion yuan by the end of this year.
As there are issues among some Chinese listed companies who suspend their trading on the exchanges optionally and some can suspend for quite a long time, the regulation in this space will be tightened to maintain the consistency of the trading and the liquidity of the market, according to Shenzhen Stock Exchange. As of August 3, there are 77 Shenzhen-listed companies that have suspended their trading, and 18% of them have suspended for two to three months.
The US Senate passed its National Defense Authorization Act 2019 which includes a provision barring U.S. government agencies from purchasing video surveillance products from Hikvision, Dahua and Hytera Technologies. The Act will have a limited impact on the three companies in the short run as it will take about a year before the Act implemented.
Hikvision and Dahua are major players in the video surveillance industry, and Hytera is a manufacturer of radio transceivers and radio systems. Hikvision is 39.6% controlled by China Electronics Technology HIK Group, a wholly-owned subsidiary of the state-owned China Electronics Technology Group as of end June 2018.
China will make efforts to stabilize the foreign trades and investment and boost consumption, according to the Ministry of Commerce (MOC), noting that China will be able to meet the targets in the commerce sector. MOC also comments on the US raising the tariff on the US$200 billion Chinese products exporting to the US, saying that this act will not have any impact on China and disappoints the countries that are against the trade war.
A Chinese mainland spokesperson Friday reiterated the country's opposition against any official and military contact between the United States and Taiwan. Ma Xiaoguang, the spokesperson for the Taiwan Affairs Office of the State Council of China, was commenting on the U.S. National Defense Authorization Act for Fiscal Year 2019, which endorses strengthening defense ties with Taiwan. Bringing in foreign interference in cross-Strait issues will only lead to more tension and unrest in the region and further complicate cross-Strait relations, Ma said.
The share value of Oriental International Enterprise (OIE), an import and export company, has been increasing during the past few days. This is due to the preparation of the China International Import Expo which has made great progress with more than 70,000 enterprises and institutions signing up for the Expo, according to Chinese media. The first China International Import Expo will be held in Shanghai in November this year.
Listed in Shanghai in 2000, OIE is a comprehensive business company that integrates commodity trade with logistics service and consolidates the industrial operation with capital management. Orient International Holding (affiliated to Shanghai State-Owned Asset Supervision & Administration Committee), is the major shareholder of OIE.
Chinese listed banks might face challenges in refinancing, according to Chinese media. As the deleveraging continues in the financial sector, it has become difficult for Chinese banks to get approval for refinancing. Bank of Nanjing, a listed Chinese city commercial bank, failed to get private placement approvals from China Securities Regulatory Commission (CSRC). This may indicate the regulator is becoming more cautious and are controlling banks’ capital expansion, according to Chinese analysts.
China will keep its economy on a stable and healthy development track with a proactive fiscal policy and prudent monetary policy in the second half of 2018, according to a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee. China will maintain the basic tone of “seeking progress while maintaining stability” for its economic work and allow the economy to continue to perform within a reasonable range. Efforts should be made to push supply-side structural reform and win the “three tough battles,” according to a statement released after the meeting.
China Satellite Communications, a state-owned aerospace company, has recently issued its prospectus for an A-share IPO with an aim of raising 1.28 billion yuan (US$190 million). China Satellite Communications, known as China Satcom, is a Chinese aerospace company that provides services via satellites. Founded in 2001, the company used to be a subsidiary of China Aerospace Science and Technology Corporation (CASC), the main contractor for the Chinese space program, before it re-incorporated to a limited company. China Satcom was controlled by CASC by 99.71% of shareholdings.
China has been improving the infrastructure to further opening up. It recently decided to set up a national hub for imports in Shanghai. Shanghai authority will strengthen the city’s trade finance sector, support the enterprises, and improve the free trade zone, in order to provide a better environment for imports. This hub will improve the competitiveness of Shanghai as an international port, according to Shanghai authority.
Ministry of Commerce (MOC) has issued an exposure draft on foreign strategic investment. The A-shares that foreign investors acquired through strategic investment cannot be transferred within 12 months, according to the revised rules. This lock-up period used to be three years before this revision. The thresholds for the qualified foreign strategic investors have also be lowered in the revised rules.
Foreign investors will drive Chinese first-tier cities' real estate investment market this year, according to Chinese analysts. This is due to foreign investors' increasing financing activities in Asia. Chinese real estate markets, especially the first-tier cities such as Beijing and Shanghai, are expected to attract more foreign investment. In addition, as the restrictions becoming tighter for the domestic investors in this space, foreign investors will have a bigger chance than before.
China Securities Regulatory Commission (CSRC) has amended the regulations on delisting. One of the major changes is that companies violating regulations in national security, public safety, ecological security, production safety, and public health and safety will be delisted by the stock exchanges, according to the revised rules. Another major revision is that the securities regulator can suspend or terminate the listing when illegal activities are found. Before the amendment, the delisting rules state that public companies with significant legal violations would be suspended from trading and then withdraw from the market.
This year has seen as increase of Chinese education companies looking to go public, especially ones providing online services. This month, major online players in this space such as Koolearn and Hujiang submitted their IPO prospectuses. More than 10 education companies are queuing up for listing approvals. There is great demand for education-related products among Chinese customers, say Chinese analysts. Offline players China Xinhua Education, 21st Century Education and Tianli Education International have also listed in Hong Kong this year.
China is discussing with interested parties to sign 13 free trade agreements, according to the Ministry of Commerce (MOC). Japan, Korea, Norway, Israel and Panama are among the countries that are in the negotiation with China. Meanwhile, China is discussing with countries such as Singapore to upgrade the existing agreements. The Regional Comprehensive Economic Partnership which is initiated by the ten member states of the ASEAN and six Asia-Pacific countries (including China) is still in negotiation.
China's National Development and Reform Commission, the country's development supervisor, released its first National Fixed Assets Investment Development Trends Monitoring Report. According to the report, China has 459,000 new proposed investment projects in the first half of the year, up 23.3% y-o-y. New investment amount of these projects during the same period reached 73.1 trillion yuan (US$10.85 trillion), an increase of 6.9% y-o-y. China is also planning to issue documents to supervise local governments’ fixed asset investment projects, which aims to control risks from public-private-partnership (PPP) projects.
Chinese video mobile application companies have been one of the popular choices for investors in recent years. However, the regulators recently started to crack down on such companies again. Major mobile application companies in this space have been invited to meetings with regulators and 19 of them are already taken down from the mobile application stores. China's Ministry of Industry and Information Technology and interested regulators say that they will continue to tighten the supervision on such companies.
Chinese Internet café operator, Shanghai Wangyu Information Technology, is planning to list in Hong Kong. The company has attracted investors including Prometheus Capital which is 100% owned by Wang Sicong, son of Wang Jianlin, founder of Chinese private property giant Wanda Group. Shanghai Wangyu Information Technology started off as an Internet café in Shanghai in 1998 and expanded its business in Shanghai with chain stores. The company is currently preparing for its listing and will submit the IPO proposal in March next year, according to the source.
China’s gold sector is boosted by the Belt and Road Initiative (B&R). China, with its gold mining and refining technologies and talent, can play a complementary role with the regions and countries associated with the Belt and Road Initiative, most of whom have substantial gold resources, said Song Xin, head of the China Gold Association. According to the Association, Chinese companies have invested over $4 billion in overseas markets during the past few years, and accessed gold resources of more than 1,500 metric tons. Production of gold by Chinese companies in overseas destinations stood at 35 tons by the end of 2017.
China Aerospace Science & Industry Corporation (CASIC) has signed a cooperation agreement with China Development Bank (CDB). The two parties will cooperate regarding aerospace, information security, smart industry, manufacturing, and international communication, according to the agreement. The state-owned CASIC is the main contractor for the Chinese space program.
Ministry of Finance (MOF) has issued a guidance on regulating the state-owned financial institutions. The guidance tightens the supervision on these institutions, aiming to curb the cases that state-owned financial institutions control non-financial enterprises through acquiring shares. The regulators will strictly exam the qualification of the shareholders and check the funding sources.
China has deployed multiple new regulations to support the opening up of the domestic economy. Next week, a new foreign investment negative list will be implemented, which will eliminate or ease certain restrictions on foreign investors investing in banking, securities, automobile, power grid construction, railway construction and filling station construction. In addition, qualified foreign investors are also supported to participant in the state-owned enterprises (SOEs) reform, especially regarding companies in non-banking financial and automobile manufacturing sectors.
Earlier this month 131 Chinese P2P online lending platforms went bankrupt from July 2 to July 16, according to Chinese media, noting that some of these platforms are listed. Most of the bankrupt platforms are based in Shanghai and Hangzhou. Chinese regulators have been cracking down on the illegal fundraising activities which also impact the P2P lending sector. According to Chinese regulators, most of the bankrupt P2P platforms either had financially unhealthy assets or were related to illegal fundraising such as the Ponzi schemes.
A total of 42.3 billion yuan ($6.3 billion) was invested through the Shanghai/Shenzhen -Hong Kong Stock Connect from June 1 to July 19. The continuous inflow of foreign capital was attributed to the current high profitability, low valuation, and increased openness of the A-share market, industry analysts say. Banking, food, and healthcare stocks were among the favorite sectors for foreign investors. They also favored companies listed on the main board and with high market values and low valuations.
By June 23, 2,141 companies listed on the Shanghai and Shenzhen Stock Exchange have released midyear performance estimates, and 54% of them expect profit growth, according to Securities Times. Eighteen percent of the total (392 companies) expect net profits to at least double. Another 114 loss-making firms forecast turnarounds. This is driven by China's economy which recorded a GDP growth of 6.8%, surpassing the government’s annual growth target of around 6.5 percent.
Chinese regulators are issuing supportive rules on the new energy vehicles industry, which can drive the demand for metals like lithium, cobalt, copper and nickel, industry insiders say. With the world’s largest number of electric vehicle manufacturers and the largest network of charging points, China has set a goal of selling 2 million new energy cars a year by 2020. Some foreign mental and mining companies such as Eurasian Resources Group are seeking partnerships with Chinese companies to take the opportunities presented by China’s policy to promote the manufacturing and the use of new energy cars.
Hong Kong will launch a blockchain fundraising platform in September this year, according to Hong Kong Monetary Authority (HKMA). Although media has been reporting that 21 banks will participate in this project, HKMA clarifies that the platform is set up by seven Hong Kong banks and HKMA has been playing the role of a facilitator. Other financial institutions have shown their interests in this platform. The platform will cut the cost and support the SMEs’ fundraising, and reduce the dishonest transactions and repetitive fundraisings, according to the HKMA.
China has launched an over 10 billion yuan fund in Zhejiang Province, to invest in the state-owned enterprises (SOEs) reform projects. Securitization, mixed-ownership reform, and reorganization will be the main themes of these projects. The fund is set up by companies including Industrial and Commercial Bank of China, China Construction Bank, China Chengtong Holdings, and some local government financing companies of Zhejiang.
Chinese lenders bought US$928.2 billion of foreign currencies and sold US$914.4 billion from January to June this year, resulting in a net purchase of US$13.8 billion dollars, according to Wang Chunying, spokesperson for the State Administration of Foreign Exchange (SAFE). This is the first time in the past three years that Chinese commercial banks have reported a net forex purchase. During the same period last year, Chinese banks saw a net forex settlement deficit of US$93.8 billion. Wang said the shift from deficit to surplus is one of the testimonies to the steadiness and balance of China's forex market.
China will work to tackle the issues in its business environment to further improve overall competitiveness and sustain the sound momentum of steady economic performance, according to the State Council. The country has urged government authorities to address the top concerns of businesses and tackle institutional deficiencies to cultivate a world-class business environment in China.
A Chinese commerce official made remarks in response to the US' WTO challenge to China's countermeasures on the US Section 232 investigation over steel and aluminum imports, saying that Chinese measures are legitimate and in line with multilateral trade rules. China asks the US to end its restrictions that go against the WTO rules. The Chinese official called the U.S. practice "a serious damage to multilateral trade rules", and said China had submitted a request to the US for consultations on compensation in accordance with the WTO rules, but the latter refused to respond.
Hong Kong Exchanges and Clearing Limited (HKEX) have been discussing with the Shanghai and Shenzhen Stock Exchanges in terms of detailed plans of allowing dual-class share structure companies to list in Hong Kong. The dual-class share structure is common in new tech companies, enabling these companies to issue different classes of shares, granting different weighted voting rights to shareholders. HKEX also talks about enhancing the connection mechanisms with the two exchanges.
China has issued 1.4 million yuan of local government bonds during the first half of 2018, according to Ministry of Finance (MOF). In June alone, 534 billion yuan worth of local governments bonds were issued, 16% (91 billion yuan) of which were specialized bonds. The average maturity of the bonds issued during the first half of 2018 is 5.9 years.
The Chinese Foreign Ministry has refuted a statement by the U.S. Trade Representative on Section 301 Action released on July 10, which accused China of gaining an extra advantage through unfair trade practices. Chinese Foreign Ministry spokesperson Hua Chunying said that protectionism cannot protect those who adopt it and unilateralism will harm everyone's interests in today's world where every country is interdependent with a shared destiny. She said China's Ministry of Commerce (MOC) released a statement last Thursday, pointing out the U.S. statement is a distortion of facts and thus, groundless.
China and the European Union (EU) agreed to jointly work to safeguard the rules-based international order, promote multilateralism and support free trade. The agreement was reached during the 20th China-EU leaders' meeting. Both sides agreed that faced with the current complicated international situation, especially the rise of unilateralism and protectionism, China and the EU have the joint responsibility to safeguard the rules-based international order, advocate multilateralism, and support free trade so as to promote world peace, stability and development. The two sides agreed to set up a joint working group to discuss World Trade Organization (WTO) reform.
China will set up a number of pilot sites to support the development of the cross-border e-commerce sector, according to Li Keqiang, Premier of the country’s State Council. This is part of China’s plan to further open up and upgrade the country’s export and import. The pilot sites will be set up in 22 cities including Beijing, Shenyang and Haikou. The successful model generated from the pilot sites might be duplicated in other cities.
China’s National Equities Exchange and Quotations, also known as the “new third board,” saw the debut of 13 new small and medium-sized enterprises last week. With the newcomers, the total number of companies on the board reached 11,140, according to the exchange. The turnover on the board during July 9 to June 13 reaached 1.78 billion yuan (US$267 million), down 4.57% from the previous week. Last year, the total turnover on the board stood at 227 billion yuan, up 18.7% from 2016.
The Sino-US trade tension will have limited impact on China’s Consumer Price Index (CPI), according to National Bureau of Statistics of China. The consumption will maintain a steady growth in the second half of the year and the consumption upgrade will speed up, according to the Bureau, noting that China’ s economy will continue to be steady and maintain positive growth.
Chinese central state-owned enterprises (SOEs) have implemented 200 billion yuan of debt-to-equity swap programs, according to State-owned Assets Supervision and Administration Commission (SASAC), adding that China will further reduce SOE debt levels and more mergers and acquisitions will be implemented among SOEs. “The whole society pays close attention to the performance of SOEs, and deleveraging is an important national strategy that we implement continuously and attentively,” says Peng Huagang, deputy secretary-general and spokesman of the SASAC.
Guangdong and Hong Kong authorities have jointly held a summit in Hong Kong, aiming to enhance the cooperation between the two parties under the Great Bay Area. By the end of 2017, more than 150,000 Hong Kong enterprises have set up their business in Guangdong, investing more than US$270 billion. Guangdong authorities call for more infrastructure to be constructed to simplify the way Hong Kong and Guangdong participate in the Belt and Road Initiatives. Hong Kong will improve its service to support further cooperation between mainland China and Hong Kong, especially in sectors such as the service industry.
Following Xiaomi’s IPO earlier this month, several Chinese internet companies including Inke, Qeeka and FingerTango have listed in Hong Kong today. Inke is one of the popular online streaming mobile applications in China. “Unlike PC internet, mobile application companies can grow very fast if they find the right market,” says an investor of Inke. Inke’s IPO has attracted two cornerstone investors, Nova Compass Investment and Bilibili, who has bought 61.162 million and 20.387 million shares respectively, accounting for 27% of the total shares issued in this IPO.
China Banking Insurance Regulatory Commission (CBIRC) has approved several overseas banks to set up branches in mainland China. This move provides more convenience for foreign parties to participate in China’s market, which is part of China’s plan for further opening up its financial sector. The five overseas banks approved are Arab Bank Jordan, CTBC Bank, Chang Hwa Bank and Cathay United Bank.
The Shanghai authority has announced 20 sectors including automobile, aviation, and shipping to be opened up to foreign participation. Chinese regulators will implement 100 measures to encourage foreign investors to invest in certain sectors. The foreign shareholding ceiling in automobile and aviation manufacturing companies will be removed. About 90% of the 100 measures will be implemented by the end of this year.
The central parity rate of RMB against US dollar has been rising significantly, which has come to a rational level, according to Chinese experts talking to a Chinese state-owned media. The exchange rate of RMB is expected to fluctuate with more elasticity, according to the media.
China and the Arab countries has agreed to establish a “Sino-Arab future-oriented strategic partnership of comprehensive cooperation and common development,” according to Chinese President Xi Jinping during his a speech at the opening ceremony of the eighth ministerial meeting of the China-Arab States Cooperation Forum today in Beijing. Calling the Arab states China’s natural partners in Belt and Road cooperation, Xi said the cooperation had energized every dimension of Sino-Arab relations and propelled Sino-Arab all-round cooperation into a new phase. In order to promote inclusiveness and mutual learning, Xi announced a series of policies to enhance mutual understanding between the two parties.
China Banking Insurance Regulatory Commission (CBIRC) has issued a new regulation on the independent directors, or the outside directors, of insurance institutions. The new rules require an insurance institution to have at least three independent directors, and the independent directors should account for at least one-third of the total directors. The new regulation also sets the supervision mechanism for the independent directors and defines the rights and responsibility of them.
Tianjin Tasly Pharmaceutical, a Chinese medicine manufacturer, has reported to list its biopharma division in Hong Kong. This IPO aims to raise US$200 million. Established in 1991, Tianjin Tasly Pharmaceutical Co.,Ltd is a Chinese pharmaceutical company based in Tianjin. Listed on the Shanghai Stock Exchange, it is famous for producing traditional Chinese medicines.
China has shut down 88 cryptocurrency trading platforms and 85 ICO platforms since September last year, according to the People's Bank of China. The bitcoin trading in RMB accounts for less than 1% of the total bitcoin trading volume globally. Major non-banking payment platforms such as Tenpay by Tencent and Alipay by Alibaba have been advised not to offer cryptocurrency trading service. Chinese regulators have investigated about 300 cases of cryptocurrency-related illegal activities. Cryptocurrency is almost removed from the Chinese market without risk, according to PBoC.
China issued a new regulation on the asset management industry on April 27 this year. Following up on this, China Banking and Insurance Regulatory Commission (CBIRC) is working on drafting three sets of detailed rules to regulate the commercial banks’ financing products, asset management subsidiaries of banks and structured deposits. The timeline for issuing these rules is unknown. The market was expecting the detailed rules to be rolled out in late May, according to Chinese media, noting that the recent market fluctuation can be one of the reasons of postponing the launch of the detailed rules.
More than one-third (34.93%) of the trust funds in China went to the real estate sector during the first half of 2018, accounting for 241 billion yuan (US$ 36 billion). This figure grew by 40.93% from the 171 billion yuan from the same period of last year. The average the rate of return of the real estate trust was 7.51% during the first half of this year.
China has implemented additional tariffs on some import products from the US after the White House proceeded to implement tariffs on imports from China starting today. "Trump is blind to the fact that China's trade surplus is a natural result of market selection and an international division of labor. China has made it abundantly clear that it will never surrender to blackmail or coercion. The Trump administration is better advised to drop off its “delusion", according to a commentary from China's official media.
Ministry of Finance (MOF) has issued 5 billion yuan (US$750 million) of two-year and five-year treasury bonds in Hong Kong today. The bonds aim to attract 4.5 billion yuan of investment from institutional investors, and the rest 500 million yuan of bonds will be open to overseas central banks and monetary authority. MOF plans to issue 10 billion yuan of RMB treasury bonds and 3 billion yuan of sovereign bonds this year, according to the regulator’s announcement.
National Development and Reform Commission (NDRC) is consulting the public regarding regulations on investing in the automobile industry, which will help to curb the capacity of the traditional automobile industry and support the development of the new energy cars and intelligent automobiles. With more supportive rules to be issued, Chinese securities houses predict further development in relevant enterprises.
BYD, with its wide range of business in the new energy car business, will benefit from the upcoming regulations, according to Chinese securities houses. Founded in 1995, BYD engages in IT industry mainly related to rechargeable battery business, and automobile business including new energy vehicles. It is also developing other new energy products such as rail transit, solar farm, energy storage station, electric vehicles, LED and electric forklift.
China’s economy is predicted to expand by 6.7% y-o-y in the first half of this year, slightly lower than the 6.8% growth of the first quarter, according to the Chinese Academy of Social Sciences. Looking forward, the think tank says that China will need to pay attention to key issues including deleveraging and potential deceleration of investments in the second half. The think tank predicts the whole year growth of 2018 to be 6.6%.
The Guangdong authority has signed an agreement with the Ministry of Commerce (MOC) to improve the cooperation in opening up the market. Guangdong Province will leverage the Belt and Road (B&R) Initiative to enhance its economic competitiveness, according to the agreement. More measures are expected to be issued to support the opening up of Guangdong province.
On July 3, the one year anniversary of the launch of China’s Bond Connect, China Development Bank (CDB) issues a 35 billion yuan financial bond through the Bond Connect in the China Interbank Bond Market (CIBM). The tenors of the bond are one year, three years, five years, seven years, and ten years. Bank of China (Hong Kong), Amundi, and Ping An of China Securities (Hong Kong) were invited as joint global coordinators. Industrial and Commercial Bank of China, the Agricultural Bank of China, Bank of China, Bank of Nanjing and Bank of Ningbo will distribute the bond to the public through their branches and digital channels.
The private equity funds in China record an average loss of 5.95% in the first half of 2018, according to Chinese media, mentioning the underperformance of the A-share market as one of the major reasons. Over 8,000 private equity fund products record negative yields. Among the houses with over 10 billion yuan of assets under management, over 70% of them (25 houses) record loss. Around 752 products record losses of over 20%, and 273 products record losses of over 30%.
Amid the trade dispute between China and the US, China’s commodity exports to the US rise 5.4% y-o-y in the first half of 2018, down from the 19.3% increase during the same period of last year, according to the General Administration of Customs (GAC). Mechanical and electrical product exports, which accounts for 62.6% of China’s total exports to the United States, climbs 8% from one year earlier, according to GAC. The growth of traditional labor-intensive product exports, including garments and furniture, remains flat compared to the same period of last year.
National Development and Reform Commission (NDRC) and Ministry of Commerce (MOC) have issued an updated foreign investor negative list, canceling the restrictions on foreign investors investing in sectors including banking, securities, automobile, power grid construction, railway construction and filling station construction. The negative list was reduced from 63 items to 48 items. New measures will be implemented in 22 sectors to further open up to foreign investors.
The mutual fund asset in China has reached 13 trillion yuan (US$ 1.96 trillion) by the end of May this year, according to Asset Management Association of China (AMAC). This figure represents an increase of 480 billion yuan compared to April 2018. There are 116 asset management companies in China, and 44 of them are foreign joint ventures with Chinese firms. Now 13 securities companies and two insurance companies are licensed to manage mutual funds.
The securities firms, fund management firms and futures brokerage firms are exempted from regulatory fee until the end of 2020, according to National Development and Reform Commission (NDRC) and Ministry of Finance (MOF). In addition, certain regulatory fees on the Shanghai and Shenzhen Stock Exchange, Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dalian Commodity Exchange, and China Financial Futures Exchange will be reduced.
In response to US's plan to restrict inbound investment, China's Ministry of Commerce said that they are evaluating the potential impact on Chinese companies. However, this will not change China's determination to promote bilateral and international trade. According to Ministry of Commerce, no matter what actions the US will take, China will come up with solutions.
According to Chinese media, the IPO margin provided by Hong Kong brokers was only 9.7 billion HK dollars, equivalent to 3.06 times oversubscription. The underperformance of the Hong Kong equity market cooled down the interest from retail investors. In addition, the increased HIBOR rate is also regarded as a reason.
In the first quarter of 2018, Alibaba overtook IBM to be the fourth largest cloud provider, just behind Amazon, Microsoft and Google. The client of Alibaba cloud not only includes Chinese corporate looking to go global, but also international companies entering China. It is expected that as the size of Alibaba's cloud business continues to grow, its growth rate will decline in the coming year.
According to Chinese media, Hong Kong ranks no.1 in terms of number of new shares listing. It is expected that 98 new companies will be listed in Hong Kong in the first half of 2018, 44% up from the same period in 2017. However, the amount of financing is expected to decline by 8% to HKD50.3 billion.
The Chinese equity market has experienced a significant sell off over the past few weeks. However, officials from Securities Association of China (SAC) stated that the risk of stock pledging is well controled. Before the announcement of SAC, the Shanghai Stock Exchange and the Shenzhen Stock Exchange also made similar statements, noting the controllable level of risk of stock pledging.
Six major Chinese asset managers, namely E Fund Management, Harvest Fund Management, China Merchants Fund Management, China Southern Asset Management, China Universal Asset Management and China Asset Management, have raised an estimated 300 billion yuan (US$46.36 billion) this month for hybrid funds that will invest in the Chinese Depository Receipts (CDRs) of Chinese unicorns listed in overseas markets. Each of the six asset managers launched a three-year hybrid fund, money for which has been raised from retail investors as well as institutional investors. The hybrid funds will also invest in newly listed unicorns, treasury bonds, local governments’ treasury bonds and AAA-rated corporate debt. Early this month, Chinese regulators open the CDR listing application.
The MSCI’s 5% inclusion factor will be increased to 15% to 20%, according to according to Fang Xinghai, the vice chairman of the China Securities Regulatory Commission (CSRC), noting that the regulator is discussing with interested parties regarding this. The current foreign holdings only accounts for 2% of the market value of A-share, says Fang, noting that the Chinese stock market needs to further open up to foreign investors.
China had issued 7.03 billion bank cards by the end of 2017, meaning each Chinese resident has about 5 cards on average, according to a recent report by the China Banking Association. This number was up 10.3% from 2016. Consumption via bank cards accounted for 48.7% of China’s total retail sales of consumer goods. The ratio of live debit cards reversed the downward growth trend for two years and reached to 66.2% in 2017. The ratio of live credit cards rose to 73.1% in 2017.
The Shanghai free trade zone (FTZ) will implement 25 new measures to further open up the financial sector, according to Chinese regulator’s announcement on June 21. The new measures are aimed at attracting foreign financial institutions to set up their entities in Shanghai, deepening the financial innovations, improving the regulatory framework of the financial sector, and attracting more financial talents.
China will increase the loan supply for small-to-micro enterprises, according to Li Keqiang, Premier of China’s State Council. From September this year to the end of 2020, qualified small-to-micro enterprises will be granted additional tax-free loan quotas.
Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and CITIC Group were discovered by the National Audit Office of China to have illegally provided financing services to the local government financing vehicles (LGFV), illegal property enterprises, and high pollution and high energy consumption enterprises. The three financial institutions have also provided services such as loans and gold leasing to unqualified enterprises. Other problems unearthed in the three institutions’ include risk management as some of the loans and investment projects were seen as quite risky.
China’s Ministry of Commerce (MOC) says the country will open up in its own pace despite the changing attitude of the US administration. MOC will release the new negative list of foreign investors by the end of this month. A more detailed opening up plan will be included in the new negative list. China will loosen the restriction on foreign investor participation in financial, automotive, energy, infrastructure, transportation, and trading sectors.
Chinese A-share market slumped yesterday with Shanghai Composite Index dropping by 3.78% end of yesterday. “The market fluctuations was mainly caused by investors’ sentiment induced moves,” says Yi Gang, the governor of the People's Bank of China (PBoC). He suggests investors keep calm and take rational reactions. “The fundamentals of the Chinese economy are good. The Chinese market is set to develop well,” says Yi. The US announced on June 18 that it will impose tariffs on an additional $200 billion worth of Chinese goods.
Ministry of Finance (MOF) has issued a new policy, reducing certain land use taxes on logistics enterprises. The new policy takes effect from May to end of 2019. The land use tax on commodity storage facilities will be reduced significantly. This policy will help to further boost the development of Chinese logistics industry, according to MOF.
Xiaomi officially announced plans to postpone its CDR issuance in China. In Xiaomi's original plan, the CDRs were scheduled to be issued one day before the Hong Kong shares. Market analysts believed that the schedule is too tight to complete a CDR issuance. On June 15, China Securities Regulatory Commission sent a feedback document to Xiaomi, with 84 questions to be answered by Xiaomi.
After US President Trump threatened to increase its tariffs to US$200 billion, China posted a quick response on its Ministry of Finance website. The Ministry of Finance expressed its disappointment towards the US' decision. It also stated that it will would take measured actions depending on the tariffs impact on the Chinese economy.
China’s crude oil futures contracts have been widely considered a success, yet the market still has a long way to go to catch up with mature international crude benchmarks, say analysts. The trading volume of the yuan-denominated crude oil futures contracts at the Shanghai International Energy Exchange hit 65,000 lots per day and 3.5 million lots in total as of June 8, with daily transactions reaching 30 billion yuan (US$4.7 billion). The yuan-denominated crude oil futures contracts were launched in March this year, the first of its kind that opens to overseas investors, setting a crude oil pricing benchmark that insiders believe better reflects the supply and demand in China and Asia.
China Securities Regulatory Commission, China Banking Insurance Regulatory Commission and National Association of Financial Market Institutional Investors will conduct a strict investigation and supervision exercise starting from June 25 over the securities rating industry, according to Chinese media. The action aims to improve the quality and efficiency of the rating agencies.
The Chinese regulator has given state-owned banks additional loan quotas aimed towards the nonfinancial sector. The new quotas will be implemented by the end of this month, allocating more money to ease the funding crunch due to the relatively tight monetary environment, according to Chinese media. According to data from the People’s Bank of China, Chinese lenders disbursed 1.15 trillion yuan (US$180 billion) of loans in May.
The launch of Bond Connect has led RMB internationalization to a new phase, where international financial institutions can begin to use RMB to manage their balance sheet, according to Charles Li, Chief Executive at Hong Kong Exchanges and Clearing Limited (HKEX), speaking at HKEX’s 5th Annual RMB Fixed Income and Currency Conference. He says that cross-border trading in RMB through Stock Connect has been a key catalyst to increase the use of RMB as an investment currency.
In order to deepen the financial reform and further open up the Chinese market, the State Administration of Foreign Exchange (SAFE) and People’s Bank of China (PBoC) issued new regulations on the Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII) programs. The regulation cancels several restrictions on foreign investors under the two programs including the lockup period (one year) of principle investment and the 20% ceiling on outward remittances of capital. Foreign exchange hedging is also allowed under the two programs, according to the new regulation.
The National Development and Reform Commission (NDRC) and China Construction Bank (CCB) will form a cooperation mechanism to support the development of the emerging industries. The two parties will set up a national fund in this context aiming to raise 300 billion yuan (US$ 47 billion). The fund will be invested in companies in sectors including IT, new material, biology, new energy automotive and environment protection.
China Securities Regulatory Commission (CSRC) has revealed on its website that Chinese technology giant, Xiaomi, has submitted its application of listing under the newly opened Chinese Depositary Receipts (CDR) structure, a channel for overseas-listed Chinese companies to list on the A-share market. As Xiaomi has already applied to list in Hong Kong, the company will possibly be the first one to listed under both H-share and the CDR structure.
China Securities Regulatory Commission (CSRC) has issued regulations on Chinese Depositary Receipts (CDRs), a channel for overseas-listed Chinese companies to list on the A-share market. Shenzhen Stock Exchange will roll out detailed listing rules of CDR structure. CSRC will strictly screen the CDR applications, according to Li Chao, the vice chairman of CSRC, noting that the regulator will support the innovative enterprises either with a sophisticated track of record in operation or with core technology and clear prospects. A venture capital investment fund will also be set up to support qualified enterprises.
China will set up a special-purpose loan under the Shanghai Cooperation Organization (SCO) Interbank Association, according to Chinese President Xi speaking at the 2018 SCO Summit. The loan is an equivalent loan worth 30 billion yuan (US$4.68 billion), which is similar to a fund, according to Chinese analysts. The loan will be used to support the infrastructure and industrial construction of the members of the SCO.
China and Russia have signed an agreement to set up a new investment to support the two countries’ financial and industrial projects. With an initial asset under management (AUM) of 1.5 billion yuan (US$234 million), the fund aims to manage 5 billion yuan.
The supervision on Chinese internet finance sector has appeared to be successful and the ICO business has been reduced by 57%, according to PBoC, noting that most of the onshore bitcoin trading platforms are closed. This will help curb the possible risk in this industry, says the regulator. China will also take dedicate measures to regulate the bitcoin, according to PBoC.
The Chinese regulator will include all the loans overdue for more than 90 days as non-performing loans (NPL), according to a source speaking to Securities Times. There are currently some loans overdue for more than 90 days which have not be counted as NPL in some of the Chinese banks. In this context, Chinese regulator has required the state-owned banks and joint-stock commercial banks under the direct supervision of China Banking Insurance Regulatory Commission (CBIRC) to include all these kind of loans as NPL by end June 30. Banks under the supervision of local regulatory bodies are required to do so by next year.
China has started a pilot program of tax-deferred commercial pension products, with China Pacific Life Insurance rolling out the first product under this category. Last month, China’s Banking Insurance Regulatory Commission (CBIRC) has issued draft regulations on this kind of pension products, setting the thresholds for the insurance companies planning to launch such products regarding registered asset, solvency, industry track record and staffing. China Life Insurance, Taikang Life Insurance and PingAn Insurance will also launch this kind of product soon.
China Securities Regulatory Commission (CSRC) has released issuance and trading regulations on the Chinese Depositary Receipts (CDRs). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The application to list under the CDR structure is open for applications starting today. The regulator also starting to recognize the variable interest entities (VIE) structure which was not allowed in the A-share market.
The five qualified unicorn companies to list under the CDR structure, namely Xiaomi, Baidu, Alibaba, JD.com and NetEase, are expected to issue 136 billion yuan to 220 billion yuan of CDRs, according to a CSC Financial report. Xiaomi is probably the first to issue the CDRs, says the report.
China and Kyrgyzstan agreed to establish a comprehensive strategic partnership following recent talks between Chinese President Xi Jinping and visiting Kyrgyz President Sooronbay Jeenbekov in Beijing. Noting that Kyrgyzstan was one of the first countries to support and participate into the Belt and Road Initiative and related construction, Xi said China would like to make joint efforts with Kyrgyzstan to open minds and explore potentials to lift bilateral cooperation to a new level.
PICC Group, one of the world’s biggest insurance groups, has gotten the approval from regulators to list in China’s A-share market. It has been six years since PICC Group listed in Hong Kong. With its return to the A-share market, more insurance companies are expected to follow PICC Group’s move.
Listed companies in China foresee higher profits in 2018 benefiting from market growth. More than 1,100 companies released their interim result forecasts as of June 5, 769 of those companies expect higher profits; 153 of those companies forecast their profits will double in the first half of this year. This is attributed to the expansion of their main businesses, economic recovery and restructuring of the industry.
Chinese companies are expected to invest up to US$10 billion in Peru in sectors including energy and mines, telecommunications, construction and financing over the next three years, according to Jia Guide, China’s ambassador to Peru. Last week, China’s state-owned Aluminum Corp of China started work on a US$1.3 billion expansion of its Toromocho copper mine in central Peru. China COSCO Shipping Corp plans to build and operate a US$2 billion port on Peru’s Pacific coast.
China Banking and Insurance Regulatory Commission (CBIRC) has issued a draft regulation on the real-name registration system for the country’s insurance company. Each policyholder will have only one insurance account registered under the person’s real name. The new regulation will enhance the protection element of insurance products, improve the regulation on the insurance industry, and make the industry serving the real economy, according to Chinese media.
As of May 30, 2018 a total of 287 overseas institutions have received quotas amounting to US$99.46 billion under China’s Qualified Foreign Institutional Investors (QFII) program to move money into the country’s capital account, according to data from the State Administration of Foreign Exchange. The quota in the RMB Qualified Foreign Institutional Investors (RQFII) program was around 616 billion yuan (US$96 billion). First introduced in 2003 and 2011 respectively, the QFII and RQFII programs are currently open to countries and regions including Hong Kong, UK, Singapore, France, South Korea, Germany, Qatar, Canada, Australia and Luxembourg.
The Haikou Jiangdong New District of China (Hainan) Pilot Free Trade Zone, was established on June 3, 2018 to promote the development of the free trade zone (FTZ) of Hainan Island. China has decided to turn the whole of Hainan Island into an FTZ gradually, making it the largest FTZ in the country. The New District covers 298 square kilometers on the east coast of Haikou, the provincial capital, including a national wetland nature reserve and areas for industrial and urban purposes.
Chinese railway construction bonds, or the railway bonds, have come back to the market after years of absence, according to a newly issued notice by the Shanghai and Shenzhen Stock Exchange. The first tranche of a railway bond which worth 20 billion yuan will be issued in Shenzhen in June. The bonds are open to public investors and qualified investors.
Zhu Harbin, chief china economist and head of China equity strategy at J.P. Morgan thinks the inflow into A-share market is limited in the short run. “China is not a perfect market yet, especially in terms of the percentage of suspended stocks, the tax treatment, the CNY and CNH settlement, and the number of public holidays,” says Zhu, noting that more than 10% of the trading days are closed for Stock Connect, as it is only available when both mainland China and Hong Kong markets are opened. In addition, mainland China’s trading hours are fewer than in Hong Kong. Charles Li, Hong Kong Exchanges and Clearing (HKEX) chief executive, sees little chance to solve the issues over the trading days, but interested parties are discussing this.
In response to the upcoming MSCI inclusion, J.P. Morgan Securities seeks to increase its headcount in A-share equity research by 50%, according to Karen Li, head of China equity research at J.P. Morgan Securities, noting that the increase is mainly about senior hires, who will be looking into sectors including industrials, consumer, IT and financials.
After the MSCI inclusion, Industrials, healthcare, real estate, consumer discretionary, materials, diversified financials. consumer staples and utilities will increase in weightings. IT, banks, telecom, energy and insurance will decline. The weighing of the existing ten H-share banks will decrease from 14.8% to 13.8%, according to Haibin Zhu, head of China equity strategy at J.P. Morgan Securities.
China’s Banking Insurance Regulatory Commission (CBIRC) has released draft regulations on foreign-invested insurance companies in China. The foreign sharing holdings in a joint venture insurance company cannot exceed 51%. A foreign-funded insurance company should at least have one major shareholder with normal operation in the insurance business. In addition, the major shareholder of a foreign-funded insurance company should not transfer its holdings within five years after the acquisition of the shares.
In addition to the financial and automotive sectors, China will loosen the restriction on foreign investor participation in energy, infrastructure, transportation, and trading sectors. The Chinese regulator will reveal the detailed opening up plan in the new negative list of foreign investors, which will be implemented by June 30. The negative list includes areas that are not open to foreign investors.
BYD announced that it would inject 800 million yuan (US$125 million) into its equally owned joint venture with Daimler AG, Shenzhen BYD Daimler New Technology Co., Ltd., trading as Denza. The company is specialized in luxury electric cars.
Founded in 1995, BYD is listed on Shenzhen Stock Exchange and Hong Kong Stock Exchange. With 30 industrial parks globally, the company engages in IT industry mainly related to rechargeable battery business, handset and computer components and assembly services, as well as automobile business including traditional fuel-powered vehicles and new energy vehicles. It is also developing other new energy products such as rail transit, solar farm, energy storage station, electric vehicles, LED and electric forklift.
Zhejiang Province has announced its plan to build a world class bay area by 2022. The area’s GDP is expected to reach 600 billion yuan (US$94 billion). Digital economy growth is expected to contribute 50% of the total economic growth. The high and new technology industry will take up over 47% in terms of industry value added. The Guangdong-Hong Kong-Macau Greater Bay Area recorded a GDP of 10 trillion yuan in 2017 and is expected to become the world’s largest bay area in five years.
The first product under the Shanghai-London Stock Connect is expected to be rolled out this year, according to Fang Xinghai, vice chairman of China Securities Regulatory Commission (CSRC). Financial institutions from Europe and Asia are consulting interested parties on expanding their business after the Shanghai-London Stock Connect was reported to be launched this year, according to Chinese media.
The U.S. House of Representatives has passed a policy bill to prohibit the country from purchasing surveillance cameras made in China. Digital surveillance provider Hangzhou Hikvision Digital Technology is among the list of banned Chinese companies. Hikvision’s equipment is widely used in the US, according to Chinese media. The new policy bill “was made without a complete account of the facts and with no evidence to justify the claims of its sponsors,” according to a spokesperson of Hikvision.
Founded in 2001, Hikvision was officially listed on the Small and Medium Enterprise Board in Shenzhen Stock Exchange in 2010. As of end March 2018, 39.6% of the company’s stocks are held by China Electronics Technology HIK Group, a wholly-owned subsidiary of the state-owned China Electronics Technology Group.
China will soon establish the first industrial base for the two-dimensional bar codes, otherwise known as QR codes, which are widely used in areas ranging from social media to mobile payments. As companies are tapping opportunities relating to this technology, China Electronics Chamber of Commerce (CECC) has signed agreements with Beijing E-hualu Information Technology Company and a tourism resort in Changchun, the capital city of China’s Jilin province, to build an industrial base for QR codes. With a total investment of 3 billion yuan (US$470 million), the project will contain a data center, a research area, an experience zone, and an incubator, all aiming to standardize, research & development and sales of QR code services.
China is demanding more imports as the country speeds up its consumption upgrade, according to a recent report by Ministry of Commerce (MOC). About 24.4% of the total sales of Chinese enterprises are imported goods, among which automobiles and home furnishing products take a large share. About 51.1% of the total sales of automobile products in China are imported, and about 34.6% of the total sales of home furnishings products are imported.
China’s Hainan authorities and Ping An Insurance are aiming to collaborate on development of the island’s free trade zone (FTZ). Hainan Island aims to become the largest FTZ in China. Ping An Insurance will cooperate with the local government, investing in areas including infrastructure, poverty relief, and smart city construction.
Ping An Insurance is a Chinese holding conglomerate whose subsidiaries mainly deal with insurance, banking, and financial services. Being one of the top 50 companies in the Shanghai Stock Exchange, Ping An is also a component of Hang Seng Index in the Hong Kong Stock Exchange.
Foreign holdings of Chinese bonds in the interbank market surged to 1.15 trillion yuan (US$179.95 billion) during the first four months this year, recording a y-o-y increase of 49.34%, according to data from China Central Depository and Clearing. Rising foreign investment in China’s vast domestic bond market is driving policymakers to consider how to further facilitate entry into the onshore bond market, including simplification of approval procedures, according to Ma Jun, former central bank chief economist. This could attract more foreign funds and offset capital outflows if the Chinese yuan weakens, according to Ma, noting that this is an inevitable process.
The Guangdong free trade zone (FTZ) is making institutional innovations, introducing new systems every three days on average, according to the provincial FTZ office. Since being established three years ago, the FTZ has made 385 institutional innovations to explore new systems in the open economy, build an opening-up gateway and deepening cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area, according to the office. As of December 2017, a total of 210,000 new enterprises have settled in the FTZ including 9,639 foreign-invested enterprises.
China has decided to turn the whole of Hainan Island into a free trade zone (FTZ), making it the largest FTZ in the country. Hainan Province authorities will form a new fiscal system to support the construction of its FTZ. The authorities will support the cooperation among corporates, institutions and regulators in setting up investment funds for the FTZ. The authorities also plan to set an alert mechanism to prevent possible risks arising from local government debts.
The import tax on more than 100 tariff codes of automotives imported to China will be reduced starting from July, according to Ministry of Finance (MOF). The import tax on assembled cars, which used to be 25%, will be reduced to 15%. The import tax on the vehicle components which used to stand at 8%, 10%, 15%, 20%, and 25%, will be reduced to 6%
China's regulatory authorities have selected five financial institutions, namely CITIC Group, Ant Financial, Everbright Group, China Merchants, and Suning Group, as the first batch of pilot companies under a dedicated supervision project for financial holdings groups, according to Chinese media. The project will be expanded to 20 companies.
China Banking Insurance Regulatory Commission (CBIRC) has issued draft regulations on the tax-deferred commercial pension products, indicating that such products will be able to roll out soon. The draft rules set the thresholds for the insurance companies planning to launch such products regarding registered asset, solvency, industry track record and staffing. According to the draft rules, the returns on the funds of a tax-deferred pension scheme during its contribution period may be determinate, guaranteed, or floating, corresponding to product type A, B, or C.
China’s Hainan Island has launched a 100-day event starting on May 20 to attract global investment to engage in its plan of becoming an international free trade zone. The event aims to attract the world’s top 500 companies, leading industrial conglomerates and internationally well-known enterprises to start projects on the island or establish headquarters or regional headquarters in cities of Hainan. Haikou, capital of Hainan, and Sanya, a holiday resort city of the Island, are among the list of these cities.
State-owned Assets Supervision and Administration Commission of the State Council (SASAC), Ministry of Finance and China Banking Insurance Regulatory Commission have jointed issued a new regulation on the state-owned shareholdings of listed companies. State-owned shareholdings in local listed companies will be supervised by local regulatory bodies of SASAC. As Chinese state-owned shareholdings are expected to reform on a large scale, the new rules will help to control the possible impact on China’s stock market amid reform, according to SASAC. With the regulations on state-owned shareholdings in non-listed companies issued in 2016, China has formed a comprehensive system for the management of state-owned shareholdings.
More new economy companies are expected to apply for public listing on Hong Kong Stock Exchange (HKEX), according to Charles Li, chief executive of HKEX. The bourse has recently announced new rules that allow listing under dual-class share structure, or the weighted voting rights (WVR) structure. The listing applications under this structure will be effective after August, according to Li, noting that many of the new economy companies need time to prepare for their respective listings.
China steps forward regarding going green by issuing preferential policies in the northwest China’s Xinjiang Uygur autonomous region for mining enterprises with exemplary records for implementing environmental standards.
Companies that are labeled by authorities as green mining enterprises will enjoy preferential policies on mining rights, land use, as well as tax breaks and financial support over the next three years, according to a guideline issued by the regional government. The companies will also enjoy the priority status for the transfer of mining or exploitation rights when they expire.
Chinese small-to-medium size banks have been replacing the guaranteed return products with structured deposits, or the yield enhancement products, which is a combination of deposit and derivatives, in order to avoid the possible impact caused by the recently issued new regulations on asset management. According to a source talking to cnstock.com, Chinese regulators are calling to a stop of the guaranteed return products, noting that such products are playing around with the regulations, aiming to increase the interest rate of deposit products
China’s fiscal revenue recorded 11% growth y-o-y in April due to steadily increasing tax income, according to the country’s Ministry of Finance (MOF). The tax revenue increased by 14.6% y-o-y during the same period, reaching 1.66 trillion yuan, according to MOF. The country’s fiscal revenue in the first four months of the year recorded a y-o-y growth of 12.9%, reaching 6.9 trillion yuan.
The Shanghai government has announced new measures to further open up its finance market in a bid to develop into an international finance center. Sectors including banking, securities, and insurance will be further opened up.
Foreign-funded banks will be encouraged to set up branches and subsidiaries in Shanghai. The city will also support the establishment of securities, fund, and futures companies with majority ownership by foreign capital. Overseas innovative enterprises will be allowed to issue Chinese Depository Receipt in Shanghai.
China will issue new regulations on insurance companies regarding their information disclosure. Compared the version rolled out in 2010, the new rules require Chinese insurers to disclose relevant information of the company’s actual controller. This move aims to curb the risk arising from the unclear shareholding structure of some insurance companies, according to Chinese media.
The money market fund Yu’e Bao has recently released two new money market funds after the issuance of China’s new regulations on the asset management industry. It is predicted by Chinese analysts that Chinese online asset managers will begin updating their products in response to the new rules. Yu’e Bao used to be dominated by a money market fund managed by Tianhong Asset Management. With a total asset under management of 1.58 trillion yuan, Yu’e Bao is the biggest money market fund in China.
The detailed plan for the Greater Bay Area will be issued the middle of this month, according to cnstock.com. The plan is being reviewed by China’s State Council, according to the media. The Greater Bay Area, which connects Hong Kong, Macao, and cities from mainland China, aims to become one of the world’s largest bay areas, according to Chinese media.
China will set up a committee dedicated to the operating standards for blockchain, according to Economic Information Daily. Relevant rules and code of practices will be rolled out next year, according to the media. The operating standards will mark the formation of a standardized system for blockchain usage in China.
Chinese media has reported that deputy governor Pan Gongsheng of the People’s Bank of China (PBOC) said that China’s central bank would steadily advance the convertibility of the RMB capital account. The PBOC also stated that China's cross-border renminbi business continued to advance steadily in 2017 with the opening up of financial markets and the increased monetary cooperation among central banks.
Chinese smartphone producer Xiaomi saw its market valuation drop from US$100 billion to US$60-70 billion as it disclosed its listing financial documents. The company, which is planning to IPO in Hong Kong, is expected to be one of the spotlight equity trades of the year. Xiaomi’s prospectus confirmed that its mobile phone was not profitable and promises that the comprehensive net profit margin of its hardware will not exceed 5% in the future.
China’s imports from countries along the Belt and Road (B&R) outpaced its exports in 2017 for the first time, according to the State Information Center, a think tank of the country’s State Council. With a total amount of US$666 billion, the import recorded an increase of 20% y-o-y, accounting for 39% of China’s total imports value, according to the report. However, in the same year, China’s exports along the B&R recorded a rise of 8.5% percent y-o-y. But with a total amount of US$774.26 billion, the exports were still overall larger than imports.
Chinese regulators have recently announced that the rules and methods for Chinese Depositary Receipts (CDRs) are open for public consultations. The new rules will be possibly launched in the second half of this year. Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The regulation reveals the qualification of the companies that apply either through IPOs or CDRs. China’s Securities Regulatory Commission issued pilot regulations on CDRs in early April.
China’s Ministry of Finance (MOF) has issued a notice on Chinese insurance companies. Those who submitted their payment to insurance protection fund in accordance with the laws can be spared from corporate income tax. Insurance companies can utilize the protection scheme until 31 December, 2020.
Chinese regulators are discussing to set up an institution to regulate Chinese Real Estate Investment Trusts (REITs) market, according to cnstock.com. Interested parties have been suggesting China set up a regulatory body similar to National Association of Real Estate Investment Trusts (Nareit) of the US, according to the media. But whether Chinese regulators will set up an association or a new regulatory department is still under discussion, says the media.
The Chinese Intelligent Medicine Association, a national association, was set up recently to promote the integration of artificial intelligence (AI) technology with medical care industries. The new association will provide a platform for research, exchange and cooperation in intelligent medicine. While promoting the use of AI in medicine, the association will assist the government in formulating standards and regulations for the development of intelligent medicine.
The first mainland-Taiwan-joint-venture consumer finance company has recently been established in Xiamen. The company (厦门金美信消费金融有限公司) is jointly set up by Xiamen Jinyuan Investment Group, CTBC Bank and other companies. With a registered asset of 500 million yuan, the company’s business includes online and offline consumer credit business.
Ministry of Finance and some other regulatory bodies are drafting new guidance for a further tax cut. They expect the new tax regime can reduce a total amount of 60 billion yuan tax to the whole market. China Banking and Insurance Commission also stated in a press conference that they are also drafting new rules to reduce the interest rate to SMEs.
Shanghai Pudong Development Bank (SPDB) is the only bank with a decline in net profit among 26 listed banks. One of the main reasons is its huge fine of 462 million yuan in 2017. In 2016, SPDB recorded a decline of 1.09% in its net profit. SPDB, China Merchants Bank and Industrial Bank are the three most profitable joint stock commercial banks in China.
According to Shenzhen Stock Exchange, two directors of Gree, the leading electronics manufacturer, have increased their shares of the company. While the stock price of Gree started to drop since January, a few large institutional investors including National Social Security Fund still increased their shareholdings in Gree. Currently, the founder Mingzhu Dong, is no longer in the top ten shareholder list.
Since China further announced its plan to open its financial market to foreign players in 2018, Chinese regulators have received a few applications from new participants. People's Bank of China received an application of payment license from World First a few days ago while China Banking and Insurance Commission received an asset management application from ICBC Credit Suisse Asset Management. PBoC also received a credit rating agency application from UK based Experian.
A-share listed banks have all released their annual reports. According to Chinese media, the total net profits of listed banks is 1.39 trillion yuan, 4.91% up from 2016. In terms of net profit, ICBC ranked top with a net profit of 286 billion yuan. In terms of growth, Chengdu Bank recorded a net profit growth of 51.64%, ranking the first while Huaxia Bank's growth is just 0.72%, ranking the lowest.
According to East Money, among 30 listed securities firms in China, only 8 have seen net profit growth in 2018 Q1. Citic Securities still ranked top with a net profit of 2.69 billion yuan. Guotai Junan Securities ranked second with a net profit of 2.26 billion yuan, which declined 11.85% YOY. According to Chinese media, brokerage business accounted for less than 50% of most securities companies.
According to Securities & Futures Commission of Hong Kong, the total amount of securities margin lending was 26.3 billion US dollar in 2017, 9 times of the amount in 2006. HK SFC also discovered that the risk of the margin is also increasing, noting that 30% of the margin came from loans collateralized by equities. As a result, the Hong Kong regulators are trying to raise the awareness of securities brokers towards risk management.
People's Bank of China (PBoC) has issued the final version of the tightened asset management regulations, forbidding guarantee of investment products’ fixed-yield returns and limiting leverage levels to curb potential financial risks. The market is allowed to adapt to the new rules until end 2020. This will ensure sufficient preparation for financial institutions and avoid market vulnerability, according to PBoC. Compared to the proposal released in November last year, the final version eases restrictions on the assessment method of invested financial asset value, allowing certain institutions to maintain the previous method. The tightened the rules will restrict banks from investing in high-risk and short-term funding vehicles, while preventing unexpected risks including the liquidity risk, according to Chinese media.
China Securities Regulatory Commission (CSRC) has issued the new regulation on the foreign investors of Chinese securities companies. The shareholding cap of a single foreign investor in Chinese securities companies, which used to be controlled below 30%, is removed, according to the new rules. Qualified foreign investors are allowed to submit their applications for changing shareholdings or setting up joint ventures.
The government-backed National Integrated Circuit Investment Fund (NICIF) of China has finished its second phase of fundraising, attracting 120 billion yuan (US$19 billion), according to China media. Recently, the US has barred Chinese tech company ZTE from buying American technology amid the Sino-US trade dispute. The NICIF is said to set up a new fund to support domestic players of the integrated circuit business, according to a source talking to Chinese media.
China is expected to become the world’s largest insurance market by 2028, according to an Allianz report. With 1.1 trillion euros (US$1.33 trillion), representing over 30 percent of global premium income, the United States, currently is the world’s largest insurance market, but it will lose its rank to China next decade, according to the report, predicting “a historic change of guard.”
The Ministry of Industry and Information Technology is currently rolling out a directive to support the country’s smart car sector. The ministry calls for an establishment of an inter-ministry coordination mechanism and is in the process of making a strategic plan, according to a source talking to Economic Information Daily. The next step for the ministry is to announce directives on how to integrate the smart car sector, the smart transportation sector and the telecommunication sector, according to the source.
China Banking Insurance Regulatory Commission (CBIRC) is said to tighten supervision on the Internet insurance companies. It has issued a notice on the possible risk of the company’s Internet insurance industry. The regulator warns policy holders about the fraud in this industry, especially with those products promising high returns. The regulator also states that it will take measures to curb the risk in this the industry.
Ministry of Finance (MOF) is discussing with interested parties on rolling out new measures to expand the country’s import. The import tariff on products including cars and certain consumer goods will be reduced. The regulators are considering reducing the import tariff on passenger cars from 25% to 15% or 10%, according to a source speaking to Chinese media. MOF also mentions that the first China International Import Expo to be held in November this year also aims to expand China’s import.
China looks to issue stricter asset management regulations by this weekend, which would restrict banks from investing in high-risk and short-term funding vehicles and further ease financial vulnerability, according to a source talking to Chinese media. Chinese policymakers are cautious due to the proliferation of asset management products, accounting for 29.54 trillion yuan (US$4.68 trillion) of bank-issued wealth management products as of end 2017, according to the source.
China’s State Administration of Foreign Exchange (SAFE) has widened the quotas of two outbound investment schemes, namely qualified domestic limited partner (QDLP) and qualified domestic investment enterprise (QDIE), to US$5 billion each. Launched in Shanghai and Shenzhen in 2013, the two schemes will better serve China’s opening up strategy with the quota expansion. Relevant rules will be adjusted according to China's balance of payments, according to SAFE.
China’s Ministry of Finance (MOF) issued a notice, stating that tariffs on 28 drug imports will be removed taking effect from 1 May. Most imported drugs, especially anticancer drugs, are set to enjoy zero tariffs, according to MOF.
China’s Internet copyright industry was worth 636.5 billion yuan (US$101 billion) in 2017, recording a 27% increase from 2016, according to a recent report. The Internet copyright industry contributed 0.77% to China’s GDP last year, according to the report. This figure has tripled since 2013.
More efforts are needed to further integrate big data, artificial intelligence, and the Internet with the real economy, this will inject new impetus into China’s economic growth, says the Ministry of Industry and Information Technology (MIIT) in a recent statement. The digital economy, which is particularly driven by the big data sector, is increasingly driving China’s economy growth. China’s digital economy was worth 27.2 trillion yuan (US$4.31 trillion) in 2017, accounting for 32.9% of the nation’s gross domestic product, according to a recent report.
Chinese central state-owned enterprises (SOEs) in 2018 are predicted to see more mergers and acquisitions in three major sectors, namely pioneering strategic industries, environmental protection, and common technology platforms, according to a recent report by the research center of China’s State-owned Assets Supervision and Administration Commission of the State Council. The restructuring aims to elevate central SOEs’ domestic and international competitiveness, with steady progress expected within the sectors of equipment manufacturing, coal, electricity, communication, and the chemical industry, the report said.
The National Equities Exchange and Quotations (NEEQ) and HKEX have signed a memorandum of understanding regarding the "New Third Board+H" listing mode. NEEQ board, or the “New Third Board”, is used for trading shares of the public limited company that not listed in the two stock exchanges of mainland China. Qualified companies can be listed both on the NEEQ board and in Hong Kong. NEEQ-listed companies used to need to delist from NEEQ before they can be listed in Hong Kong.
The US Secretary of the Treasury expresses the intention to visit China for trade issues. In response, China’s Ministry of Commerce (MOC) spokesperson states that Beijing welcomes the US to do so. Yi Gang, governor of People's Bank of China, says on the G20 Finance Ministers and Central Bank Governors Meeting that China will further open up due to the uncertainty generated by the trade dispute.
HKEX is reported to be in talks with the mainland’s regulators about the "New Third Board+H" listing mode. The National Equities Exchange and Quotations (NEEQ) board, or the “New Third Board”, is used for trading shares of public limited company that not listed in the two stock exchanges of mainland China. “The New Third Board has its own rules, while HKEX also welcomes the companies listed there to undergo IPO in Hong Kong if they fulfill the listing requirements here,” says Charles Li, chief executive of HKEX.
HKEX will release next week the result of the consultation regarding rolling out dual-class share structure, or the weighted voting rights (WVR) structure, in Hong Kong. The application of listing under dual-class share structure will open on April 30. The dual-class share structure, enables companies to issue different classes of shares, granting different weighted voting rights to shareholders. Chinese technology companies such as Alibaba had listed on the New York Stock Exchange because mainland Chinese stock exchanges didn’t support this structure. HKEX is confident that Chinese tech companies such as Xiaomi and Ant financial will come to list in Hong Kong, according to Charles Li, chief executive of HKEX.
China will roll out new rules regarding improving the infrastructure of the new energy automobile industry, promoting relevant innovations, according to a source talking to Economic Information Daily. This will help to reduce the cost of manufacturing new energy cars and increase the quality of the production of such vehicles, according to Chinese media.
China has seen the number of unicorn companies steadily grow in the first quarter of this year, according to a recent report. Thirty three unicorn companies, valued at US$1 billion or more and not yet listed, were added to the unicorn list in the first quarter in China, according to the report. The total number of unicorn companies in China has reached 151 as of end March 2018. The majority of the 33 companies are in the internet services, culture and entertainment or automobile sectors.
China will continue to take strong measures with Russia to optimize the bilateral trade structure, actively expanding the scale of trade in electromechanical and high-tech products, according to China's Ministry of Commerce (MOC). The two parties will expand the import and export of agricultural products mutually, and develop new types of cross-border e-commerce, according to MOC. In 2017, Sino-Russian trade volume reached US$84.07 billion, an increase of 20.8% y-o-y. In the first quarter of this year, bilateral trade volume has increased by nearly 30% y-o-y, and is expected to exceed US$100 billion end of 2018.
China will implement a new negative list for foreign direct investment (FDI) by the end of the first half of this year, according to State Administration of Foreign Exchange (SAFE). The new list aims to provide better facilitation to the foreign investors, supporting the further opening up of China. The country will also reform in QFII, RQFII, QDII and QDLP (qualified domestic limited partnership) schemes, according to SAFE.
Hainan island has taken its first step towards further opening up by developing its tourism industry. Chinese media has revealed that the island has open visa-free access for tourists from 59 countries. The Chinese government has recently announced the opening up strategy for Hainan Province, aiming to turn the island into an international center of consumption and tourism. The new policy will take effect next month.
China will continue integrating healthcare services with the Internet Plus Initiative to improve the quality and efficiency of the sector under a new guideline approved by the State Council last week. A service system will be established to promote integration in areas such as public health, privately contracted doctors, medical supplies and medical insurance reimbursement settlement, according to the guideline. Relevant supportive policies will be issued soon, according to the State Council.
The shareholding cap for foreign investors of Chinese enterprises in shipbuilding and aircraft manufacturing will be removed, according to the country’s National Development and Reform Commission (NDRC). Chinese regulators will also take steps to remove the cap of the foreign shareholding of Chinese automobile manufacturers in five years. These are part of China’s strategy of further opening up the manufacturing industry.
China plans to build a 525-MW hydropower station on the Wujiang River, a tributary of the Yangtze River, in Southwest China’s Chongqing municipality. This project is expected to involve an investment of 10.2 billion yuan (US$1.6 billion). It has gotten the green light from the National Development and Reform Commission, according to the Chongqing Municipal Commission of Development and Reform, marking the completion of a cascade of hydropower stations on the section of the Wujiang River in Chongqing.
Qualified Chinese Internet companies will be supported to enhance their business through Chinese capital market, including the mainboard, SMEs board, GEM, NEEQ, regional equity market, and bond market, according to CSRC. The regulator will improve relevant regulation, increasing its compatibility and flexibility, according to CSRC.
China will turn the whole Hainan island into a free trade zone (FTZ), making the island the largest FTZ in China, according to the country’s State Council. Horse racing and new sports lotteries will be allowed on the island. Chinese analysts say that the government will also focus on the development of sectors including ecological agriculture and tourism. The Hong Kong Jockey Club says “there has not been any discussion” so far with the Hainan authorities, but it would be pleased to exchange views on the promotion of equine sports there, if invited, according to Hong Kong media.
China’s Jilin Provincial Government, Chinese technology giant Tencent, and Chinese state-owned automotive manufacturing company FAW Group, have recently signed a cooperation framework, aiming to revitalize the traditional industrial zone in the northern part of China, also known as the country’s rust belt. Tencent will take the opportunities in China’s strategy of revitalizing the rust belt and support the digitalization of Jilin Province, according to the governor of Jilin. Tencent will seek further cooperation and support the development of Jilin Province and FAW Group, according to Ma Huateng, CEO of Tencent.
China’s overseas M&A deals in economies along the Belt and Road (B&R) Initiative achieved a record high of US$48.2 billion in 2017, recording a y-o-y growth of 81%, according to a recent report by EY. China’s outbound direct investment (ODI) dropped by 32% y-o-y end of last year. The investments in B&R economies increased despite this. The nonfinancial ODI of China reached US$14.4 billion, covering 59 B&R economies, accounting for 12% of the country’s total nonfinancial ODI, according to the report.
Chinese regulators will roll out regulations and measures regarding industrial clusters and the regional development of manufacturing industry. A guidance paper on constructing an international industrial cluster in the Yangtze River Economic Zone will be released within this year. Setting up regional industrial clusters has become a trend in China’s manufacturing industry. With the support from the regulators, China will form several international industrial clusters, enhancing the competitiveness of Chinese manufacturing industry and ensuring the high-quality economic growth of the country.
China Construction Bank (CCB) has recently set up a self-service branch in Shanghai. This branch is equipped with technology including robotics, bio-identification, VR and AR, becoming the first self-service bank in China. This branch was opened on April 9.
China’s State Administration of Foreign Exchange has issued a notice regarding the reform of the Qualified Domestic Institutional Investor (QDII) scheme. The regulator invites interested departments to seek additional quota under the QDII scheme, according to Chinese media. This marks the reopening of QDII quota application after two years. The quota will be allocated according to aspects including institution type, asset under management, and the evaluation of the regulators, according to the media.
Hainan Island will roll out new regulations in favor of further opening up, according to a source talking to cnstock.com. The island will possibly set up a free trade zone, according to the source, noting that the government will focus on the development of sectors including ecological agriculture and tourism.
China’s recent announcement of further opening up is irrelevant to the current trade dispute between China and the US, according to Geng Shuang, spokesperson of China’s Ministry of Foreign Affairs. The announcement is in line with China’s own schedule and roadmap of opening up, according to Geng, noting that opening up has always been China’s position. China will strike back “forcefully without hesitation” if the US makes further moves that hurt China’s interest, according to Geng.
China Securities Regulatory Commission (CSRC) and Hong Kong’s Securities and Futures Commission (SFC) have agreed to expand the daily quota of the Shanghai/Shenzhen Stock Connect. The daily quota of northbound trading through the two schemes has increased to 52 billion yuan respectively; the southbound trading 42 billion yuan respectively.
“More international indexes will include China's A-share. This will be a trend,” says Sally Wong, chief executive officer of Hong Kong Investment Funds Association. “The quota of the Stock Connect is sufficient for now, but in the long run, it will never be sufficient with the increasingly growing demand from international investors.”
China’s import tariff on automobiles will be decreased to less than 10%, according to a source talking to Chinese Business News. The country’s current import tariff on automobiles is 25%. During the second half of last year, China decided to decrease the import tariff on automobiles within the free trade zones to 12.5%.
National Development and Reform Commission, Ministry of Finance, Ministry of Commerce, People's Bank of China, China Banking Insurance Regulatory Commission and China Securities Regulatory Commission have jointly issued a position paper on the country’s outbound investment funds. Qualified outbound investment funds will be supported to do fundraising in and out of mainland China.
The paper also encourages cooperation with international institutions such as the World Bank, Asian Infrastructure Investment Bank, the New Development Bank, and Asian Development Bank, increasing their investment in Chinese outbound investment funds. This will also support the Belt and Road Initiative, according to the paper.
China Life Insurance’s draft prospectus was published on CSRC’s website yesterday. The company will be listed in Shanghai, and will become the 5th insurance company that is listed both on A-share and H-share. The company will issue up to 4.599 billion shares, taking up to 9.78% of the total shares of the company. The company has been reported to consider listing on the A-share market since 2008. Last year in May, the company first announced that it will apply to list in Shanghai.
China Banking Insurance Regulatory Commission (CBIRC) has issued a notice on rolling out four regulations on financing guarantee companies. The regulations will cover aspect including licensing, asset allocation, and cooperation with financial institutions. The regulations will improve market order, regulate the business operation of financing guarantee companies, control risks, maintain sufficient solvency, and better serve the small-to-micro-size companies.
Steps in encouraging the free flow of talent, goods, capital and information will be sped up as the general planning of the Greater Bay Area to be released soon, according to the governor of Guangdong province, speaking at the Boao Forum for Asia Annual Conference 2018. Guangdong will enhance cooperation with Hong Kong, says the governor. Carrie Lam Cheng Yuet-ngor, chief executive of the Hong Kong Special Administrative Region, says Hong Kong can make contributions to the Area in creativity and connections.
Ministry of Industry and Information Technology released a report on the mobile phone industry in China in the first quarter of 2018. The total shipment volume has dropped in the first three months, down by 26.1% YOY. Chinese brands account for over 90% of total shipment. In particular, Huawei, OPPO, VIVO, Xiaomi and Apple are the five largest players in China.
According to Chinese media, HNA group has sold 26 overseas projects, equivalent to 60 billion yuan, in the past nine months. Most of the overseas projects are in the real estate sector and some of the assets are even recently acquired by HNA. It is expected that HNA will focus on its main business, the airline business and continue to reduce its debt level by selling assets.
Chinese AI startup Sense Time recently announced a new round of financing led by Alibaba Group. According to Chinese media, Alibaba has invested five AI companies over the past two years. Currently, China's BAT are all investing heavily in AI.
Ministry of Commerce and Ministry of Foreign Affairs reiterated its strong standpoint on the trade war on Friday. The two regulatory bodies said that China will retaliate again if the United States implements additional tariffs. According to the two regulatory bodies, China will continue to open its market and promote international trade.
Have experienced a few years of lower profit growth, China's banking industry has seen a higher growth in net profit in 2017, especially for state owned banks. The big five banks recorded an average of over 4% net profit growth in 2017. Apart from state owned banks, joint stock commercial banks are improving. China Merchants Bank increased its net profit by 13% in 2017.
According to Chinese media, a dedicated fintech risk management regulator in China has issued a guidance on the online asset management platforms. Unlicensed asset management platforms and those doing illegal fund raising activities will be clamped down. Large internet companies such as Alibaba, Tencent and Baidu are unlikely to be affected as their already obtain fund distributor license.
China’s Insurance Security Fund will inject 60.8 billion yuan into Anbang Insurance Group who was recently taken over by Chinese regulators. This was approved by the newly set-up China Banking Insurance Regulatory Commission (CBIRC). The registered assets of this insurer will be increased to 61.9 billion yuan. The Insurance Security Fund serves to provide bailout fund for non-governmental institutions. The Fund will take steps to transfer its shares in AnBang Insurance, making sure the company is private-owned.
China’s third-party mobile payment market maintained its strong developing momentum and expanded 27.9% quarter-on-quarter in Q4 2017, according to a recent research. The value of third-party mobile payment transactions during the Q4 2017 totaled 37.7 trillion yuan (US$6 trillion), according to the research. Alipay, operated by Alibaba affiliate Ant Financial, together with WeChat, operated by Tencent, dominated the market, with market shares of 54.26% and 38.15%, respectively, according to the research.
Chinese President Xi Jinping and the Zimbabwean counterpart Emmerson Mnangagwa agreed to establish a comprehensive strategic partnership of cooperation between the two countries. The two sides signed bilateral documents on economic and technology cooperation, agriculture, science and technology and human resources, aiming to enhance exchanges of views on state governance and expand cooperation in areas including trade, investment, technology, telecommunication, infrastructure, etc.
China Securities Regulatory Commission (CSRC) will revise the regulation on IPOs this year, according to Chang Depeng, spokesperson of the CSRC. The regulator will revise 32 regulations this year, says Chang. In addition to IPOs, these regulations cover aspects including private investment fund and sharing holdings of the securities companies.
China Securities Regulatory Commission (CSRC) has issued pilot regulations on China concept stocks and Chinese unicorns coming back to A-share market, stating that qualified companies can come back to the A-share market through IPO or Chinese Depository Receipts (CDR). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The regulation reveals the qualification of the companies that apply either to IPO or to CDR. Chinese analysts say that the issuance of the regulation will not cause obvious liquidity crises.
The Greater Bay Area will be among the world’s four largest bay areas, following the New York Bay, New York Bay and Tokyo Bay, according to a recent Chinese report. Detailed developing plans are expected to issue this year, focus on investment opportunities on including infrastructure, finance, trading, IT and tourism.
Tianjin Economic and Technological Development Area (TEDA) has signed a contract to build an offshore wind power station to power its petrochemical industries. TEDA signed the contract with China Three Gorges New Energy Co., Ltd on a 18-billion-yuan power base with an annual generation capacity around 2.4 billion kilowatt-hours, enough to power ten medium-sized petrochemical factories. The project requires approval from the central planners and construction is expected to begin in 2020.
National Development and Reform Commission (NDRC) will advance the debt-to-equity swap and equity financing of the country’s central stated-owned enterprises (SOEs). Over 70% of China’s state-owned asset will be listed by 2020, according to NDRC. NDRC has been encouraging central SOEs to increase its capital strength by debt-to-equity swap and equity financing. In order to deleverage and control the risks, NDRC has set up warning lines of enterprises’ debt-to-assets ratio. The debt-to-asset ratio of industrial enterprises should not exceed 70%, non-industrial enterprise 75% and research and development enterprises 65%.
China will set up a fund for financing guarantees, according to China’s Premier Li Keqiang. This will ease the pain points of small-to-micro enterprises and rural enterprises in their fundraising process, according to State Council. The fund aims to raise 500 billion yuan in three years, supporting the one-fourth of the total financing guarantees business in China.
The newly revised regulation on the information disclosure of insurance companies will be implemented in July this year. This is the revised version of the same regulation issued in 2010.
The new regulation requires insurance companies to disclose more detailed information, adding new items requiring information on the actual controller of an insurance company. The regulator is closing the gap between the information disclosure standard of unlisted companies and public companies.
China and Morocco signed a Memorandum of Understanding (MoU) for the establishment of the Silk Road business council yesterday. This council aims to serve as a platform for the industrial and commercial sectors of the two countries. It will provide information on investment opportunities and help solve problems that hinder commercial cooperation at the international level. Permanent exchanges of updated information on the economic situation of the two countries, the regulatory evolution, commercial data, and industrial and commercial policies will also be available on this platform.
There are 31 IPO applications being suspended since March this year. Many securities companies, especially the small-to-medium size companies, are influenced by this, according to Chinese media. Fifty-six companies’ IPO applications were suspended in 2018 so far. More than 10 applications were canceled within one day on March 22.
China will roll out a list of pilot enterprises to transfer the state-owned asset into National Social Security Fund (NSSF). The list includes about five central state-owned enterprises. Interested departments including MOF and SASAC are working on the plan, noting that the plan does not equal to selling the state-owned asset.
In order to build a new international economic order and safeguard the interests of developing countries, China and India will further enhance their trade and economic cooperation
The trade volume between China and India reached a record high of US$84.4 billion in 2017, up 20.3% from the previous year, according to China’s Commerce Minister Zhong Shan, adding that China has remained as India’s largest trading partner. The accumulated investment in India by Chinese enterprises amounted to over US$8 billion while India’s investment in China rose an average of 18.5% annually over the past three years.
Guangdong Province has recently announced its plan of boosting the AI industry. The total asset of the core business of AI will exceed 150 billion yuan by 2050, according to the plan, noting that China’s AI industry will be located in the high-end of the global value chain.
This news boosted the stock value of several technology companies. Chinese fintech company, Hundsun Technologies increased by its daily limit of 10% today. Hundsun Technologies provides software products and services, especially fintech related service, such as providing financial data for financial institutions.
The company's customers include brokers, future companies, public funds, trust companies, insurance companies, banks, exchanges, and private equity funds. The company is also engaged in the provision of wealth management tools for individual investors. The company distributes its products within domestic markets and to overseas markets.
China’s first yuan-denominated oil futures is officially launched though Shanghai Futures Exchange (ShFE) today. This innovation is also one of China’s measures of further opening up, according to Fang Xinghai, the vice-chairman of China Securities Regulatory Commission (CSRC), talking to CCTV News. CSRC will roll out more measures similar to this, according to Fang, noting that these measures will help international pricing standards better reflect the supply and demand of Chinese market.
China’s electricity consumption this year will grow about 5.5%, provided there are no extreme weather conditions on a large scale, according to China Electricity Council. The council sees a general surplus in power supply this year, noting that short supply will only be seen in some regions during peak hours. There will be a generally loose environment for power supply and demand, as the supply capability will continue to rise, according to the council. The predicted growth in 2018 is slower than the 6.6% in 2017 and 13.3% for the first two months of this year.
China will deepen the integration of Internet, big data, AI and manufacturing, according to Ministry of Industry and Information Technology (MIIT). Chinese AI leader iFlytek’s stock value on A-share market increased by about 4% today. Founded in 1999, iFlytek is a Chinese information technology company listed in Shenzhen. The company creates voice recognition software and other voice-based internet or mobile products covering education, communication, music, intelligent toys industries. China Mobile holds 12.9% of iFlytek’s shares as of end September 2017. The total asset of China’s AI industry has reached 70 billion yuan in 2017, according to a recent report on Chinese IT industry, noting that the figure will increase to 160 billion yuan by 2020.
JD.com’s finance arm, JD Finance, launches a new product called “The Big Dipper” (北斗七星) to improve the efficiency of small-to-medium Chinese banks in their retail credit business. The product has on-boarded about 30 Chinese banks including Jiangsu Bank, Nanjing Bank, and Baoshang Bank. The new product aims to help each client increase the retail credit lending by 10 billion yuan within one year, according to JD Finance.
The total asset of China’s AI industry has reached 70 billion yuan in 2017, according to a recent report on Chinese IT industry. This figure will increase to 160 billion yuan by 2020, according to the report. Ministry of Industry and Information Technology (MIIT) released 97 pilot projects in AI. The regulator also aims to set up 202 new projects in intelligent manufacturing, serving the upgrading of Chinese enterprises.
China’s electric utility monopoly, State Grid, will invest 21 billion yuan over the next three years until 2020 for the construction of power grid in poverty areas. The investment within this year will amount to 6.6 billion yuan. The construction projects cover more than 12100 Chinese villages in poverty, mostly in Tibet, Sichuan, Yunnan, and Gansu.
In order to speed up the development of the digital economy, China will roll out policy papers with regulations and guidance on the country’s national strategy, “Internet Plus (互联网+)”, according to National Development and Reform Commission (NDRC). The “Internet Plus” strategy will be implemented in sectors including manufacturing, agriculture, healthcare, and education. A summit regarding the digital economy of China will be held this April. Major players in the technology industry including Tencent, Huawei, Meituan.com and iFlytek will be attending the summit.
China will roll out a project aiming to enhance the outward foreign investment, according to the country’s Ministry of Commerce. “MOC will foster a batch of multinational corporations (MNCs) with reputation and influence on a global scale,” according to Han Yong, an official with the MOC. This is in line with the country’s strategy of upgrading Chinese enterprises, according to an analyst with the MOC, noting that the number of Chinese MNCs will keep increasing in the future.
Many Chinese securities companies have received a notice of inspection regarding IPO, according to Chinese media, noting that a new round of IPO probing has started.
Regulators rolled out new rules in this probing. Companies with aggregate net profit under 100 million yuan over the last three years, or companies with net profit under 50 million yuan last year, will have to cancel their IPO application or receive on-site inspections.
The ports in Liaoning, a province in north China, will be integrated into a company, aiming to build a port and shipping center for Northeast Asia. Supported by China Merchants Group, the integration will start with the merger of Dalian Port and Yingkou Port. The integrated shipping center might also include companies from the aviation industry in the future, according to Chinese media.
Several Chinese P2P platforms have released notices, stating that some banks have close their online payment channels. This might be in line with tightened regulation on third-party payment, according to Chinese analyst. The online payment channels will be closed for the moment, and whether they will be opened is unknown, according to Agricultural Bank of China speaking to Guangzhou Daily. People's Bank of China released a notice on regulating the innovative payment methods in December last year.
By the end of the first half of 2018, China will roll out the third batch of state-owned enterprises (SOEs) to conduct the mixed-ownership reform, according to Xiao Yaqing Chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The reform aims at introducing private capital to invest in the SOEs. There are 31 enterprises on the new list of SOEs, according to Xiao.
China will shorten the blacklist of foreign investors, further to loosen admission into the Chinese market, according to Li Keqiang, China’s Premier. The restriction on market admission will be relaxed over the next few years, says Li. The shareholding ceiling of foreign investment will be lifted or abolished, Li adds, especially in sectors including healthcare, education, aged care, and finance.
China will soon release a series of reform plans regarding the opening up of the country’s market, according to Yi Gang, the newly appointed governor of the People’s Bank of China (PBoC). In addition to this, Yi says that he will focus on the implementation of a prudent monetary policy, making sure that China’s financial industry is stable.
Shanghai Stock Exchange (SSE) will set up a special department, revising and approving the application of issuing the Belt and Road (B&R) bonds. The B&R bonds include government bonds issued by governmental institutions from countries along the B&R, corporate bonds issued by enterprises and financial institutions from countries along the B&R, and corporate bonds with fundraising for the construction of B&R projects. SSE will support and boost the financing and investment of B&R related projects, according to a notice by the bourse. SSE has talked to several B&R countries regarding this, according to the notice.
Interested Chinese government agencies are discussing a new regulation on Chinese Depository Receipts. Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. So far, the two bourses in mainland China have expressed their intentions to support new economy companies. In addition to the CDRs structure, overseas-listed new economy companies can also delist from overseas bourse and do reverse merger or IPO, according to Chinese media.
Foreign direct investment (FDI) into mainland China from Singapore, South Korea and the United States increased 62.9%, 171.9% and 56.8% y-o-y respectively during the first two months of 2018, according to the Ministry of Commerce (MOC). The total FDI rose 0.5% y-o-y, reaching US$22.1 billion during the same period. The non-financial outbound direct investment (ODI) increased by 25.2%, reaching US$16.8 billion during the same period. This ODI is boosted by the investment in the countries along the Belt and Road Initiative.
Shanghai plans to expand its free trade zone, including more seaside areas. Local authorities in Shanghai have already submitted their proposed plan for this. So far, more than 10 provinces and municipalities in China have applied for building or expanding free trade zones, including Zhejiang, Guangdong, Tianjin, Fujian and Hainan.
Shanghai Stock Exchange (SSE) will expand the financing channels for the construction along China’s Belt and Road Initiative (B&R), boosting the cooperation among the interested capital markets. Pilot projects of D-shares business will be advanced, according to SSE. The bourse will also improve the issuance mechanism of Panda bonds. Interested institutions and qualified enterprises in the countries along the B&R will be supported to issue RMB bonds in SSE.
In order to pave the way for overseas listed new economy companies to come back to A-share market, China Securities Regulatory Commission (CSRC) will soon announce the revised regulations on Chinese Depository Receipts (CDRs), according to Yan Qingmin, deputy chairman of CSRC.
Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. “We will pick a batch of new economy companies and several unicorn companies. They will soon be on the list of qualified companies for the CDRs scheme,” says Yan, noting that the unicorn companies will be selected by interested departments with specific metrics.
Chinese power giant, State Grid Corporation of China, is building an energy-services company to promote the distribution of clean energy. This is part of State Grid’s efforts to restructure China’s energy consumption, according to Shu Yinbiao, the company’s chairman. The company is also supporting rural households in northern China to use electricity as a heating source.
The public offering of new economy companies will be supported and encouraged, according to the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government. In order to boost the state-owned enterprises, the Commission plans to deepen the mixed-ownership reforms of state-owned enterprises (SOEs), introducing private capital to invest in the SOEs. Certain SOEs, or the core business of certain SOEs, will be encouraged to go public, according to the Commission.
The 15th China-ASEAN Expo is scheduled to be held from Sept 12 to 15 in Nanning, capital of South China’s Guangxi Province, according to the organizer's announcement today. With Cambodia being the country of honor, the theme of this year's expo is “Jointly building the 21st Century Maritime Silk Road and the China-ASEAN community of innovation.” More countries along the Belt and Road Initiative will be invited for more corporations in business, according to the organizer.
China Securities Regulatory Commission (CSRC) has come up with a reform plan for new economy companies to list on the A-share market, according to a source talking to yicai.com. The regulators have reached an agreement regarding overseas-listed companies coming back to the A-share market through Chinese Depository Receipts (CDRs). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. How the investors of the new economy companies could be protected is a topic that needs to be discussed states Chinese media.
China’s pension fund, the National Social Security Fund (NSSF), is currently managed by the country’s National Council for Social Security Fund. The Council, which has been under the control of the State Council, will start to be managed by the country’s Ministry of Finance (MOF). This move aims to strengthen the management and supervision of the pension fund, according to the National People's Congress. The asset management ability of the Council will be enhanced.
China Banking Regulatory Commission (CBRC) has issued a guidance to support the innovation in capital instruments. Chinese commercial banks are encouraged to integrate domestic and overseas resources, expanding the issuance of capital instruments. The regulations relating to preference shares and eligible Tier-2 capital instruments will be revised according to commercial banks’ experience.
China Securities Regulatory Commission (CSRC) is consulting the public in revising the regulation on foreign capital investing in securities companies. The regulator has issued a draft regulation further opening up the market. The shareholding ceiling of foreign investors in a Chinese securities company is loosened to 51%. This draft regulation is a follow-up of the consensus from the meeting between China and the US last year in November.
Investors of the delisted companies still enjoy the same rights as common investors do, according to Jiang Yang, the vice chairman of China Securities Regulatory Commission (CSRC), during a seminar at the “Two Sessions”. The country will issue more rules to protect the rights of investors, Yang adds. CSRC calls for institutions in the market to support the advance of investor protection, according to Yang.
The law on e-commerce and the law on securities has already passed the second reading of the Standing Committee of the National People’s Congress (NPC), according to NPC. Chinese regulators are also discussing establishing a registration system for the public offerings, according to NPC.
There are no technical obstacles in opening the southbound trading of the Bond Connect, according to Yi Gang, deputy governor of the People's Bank of China (PBoC), noting that it can be implemented whenever it is needed. The Bond Connect is a pilot scheme that connects China’s interbank bond market with international investors through Hong Kong Stock Exchange (HKEX). The northbound trading was launched in July last year, giving international investors northbound access to trade bonds on the China Foreign Exchange Trading System (CFETS). HKEX has been calling for the implementation of northbound trading.
A new regulation on financial holdings companies is under discussion, according to Pan Gongsheng, deputy governor of the People's Bank of China (PBoC). There are regulatory gaps in the supervision of financial holdings companies, according to Pan. The new regulation will focus on questions including the supervision of connected transaction.
Xiongan New Area will be introduced to the global community this year, according to Wang Yi, China’s Foreign Minister. Xiongan New Area is a state-level new area in the Baoding area of Hebei, China. Established in April 2017, the area is located about 100 km southwest of Beijing. “Projects from the world over that can meet high-quality requirements are welcome (to Xiongan Area),” says He Lifeng, minister of the National Development and Reform Commission.
Shenzhen Stock Exchange (SZSE) will reform the growth enterprise market (GEM) and improve the market system to attract leading innovative companies to list in Shenzhen, according to Wang Jianjun, general manager of SZSE. “We do not want to miss the new economy companies anymore. The SZSE is equipped with abilities to embrace these companies,” says Wang.
China will issue a guideline for the operation of local state owned assets investment platforms this year, according to Xiao Yaqing, chairman and deputy secretary of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). There are three channels of state-owned assets investment: through the Chinese government, through institutions authorized by the Chinese government, and through state-owned enterprises (SOEs). Local state owned assets investment platforms are the second channel. Through investment and financing, these platforms manage state-owned assets, aiming to inject power into this sector.
China Insurance Regulatory Commission (CIRC) has issued regulations on the shareholding of insurance companies, setting standards for the potential investors and shareholders of an insurance company. Asset management and trust products are allowed to invest in listed insurance companies, according to the rules, noting that one single product can hold as much as 5% of stake in an insurance company. Controlling shareholders are not allowed to transfer the holdings within five years after the investment; strategic shareholders are prohibited to transfer within three years.
Kweichow Moutai overtook China Ping An Insurance in February, ranking the first in terms of the trading volume through Shanghai Stock Exchange, according to HKEX. Listed in Shanghai, Kweichow Moutai Co., Ltd. is a partial state-owned enterprise in China, specializing in the production and sales of Moutai liquor, together with the production and sale of beverage, food and packaging material, development of anti-counterfeiting technology, and research and development of relevant IT products.
Another Chinese liquor producer, Wuliangye, also ranked the first in February in terms of the trading volume through Shenzhen Stock Exchange, according to HKEX. Founded in 1997, Wuliangye Yibin Company Limited went public in Shenzhen a year after its establishment.
China will deepen the reform on the country’s stock exchanges, according to Jiang Yang, the vice chairman of China Securities Regulatory Commission (CSRC). Jiang calls for a more inclusive listing mechanism. Regulations relating to IPOs will be reformed, with support for companies in new economy sectors including biotechnology, cloud computing, AI, and high-end manufacturing.
CSRC recently gave the green light to Foxconn's IPO by significantly speeding up the submission procedure.
Foreign enterprises can enjoy preferential national policy when relocating to northeastern China, according to China’s National Development and Reform Commission (NDRC). The regulator says that the industrial output of foreign enterprises have taken about one-fourth of the country’s total industrial output, according to NDRC, noting that foreign enterprises play an important role in China’s economic development. The innovations in the free trade zones will be implemented across the country, according to the regulator.
A detailed construction plan with timeline and roadmap for the Greater Bay Area will be rolled out soon this year, according to Ma Xingrui, governor of Guangdong Province. The infrastructure that improves the connectivity of mainland China, Hong Kong and Macao is the crucial part of the plan, according to Ma.
China has set its GDP growth target at around 6.5 percent for 2018, unchanged from that for 2017, according to the country’s Government Work Report released today. China slightly lowered its fiscal deficit target to 2.6% of GDP for this year. It aims to maintain inflation level at around 3% and create over 11 million new urban jobs in 2018. The country will strengthen the fundamental role of consumption in driving economic growth while promoting effective investment this year, according to the report. Financial risk prevention will continue to be a tough task this year, requiring joint efforts to hold the bottom line, especially by controlling the money supply and keeping an eye on property bubbles, according to Yang Weimin, deputy head of the Office of the Central Leading Group on Financial and Economic Affairs.
China will open the manufacturing sector with all measures, according to the country’s Premier Li Keqiang. The country will further open up sectors including telecommunication, healthcare, education, aged care, and new energy car, according to Li.
China will set up a guaranteed fund to support the fundraising of qualified innovative companies, according to the country’s Premier Li Keqiang. The preferential tax policy for venture capital investment and angel investment will be introduced to more pilot cities, according to Li.
Beijing Gehua CATV Network will collaborate with Tencent and China’s state media, People’s Daily Online and set up a new joint venture. The new company will focus on livestreaming and short video production.
Founded in 1999, Beijing Gehua CATV Network Co., Ltd. is a China-based company principally engaged in the construction, development, operation, management and maintenance of cable radio and television networks. The company listed in Shanghai in 2001, becoming the first cable television network to go public in China.
China’s sharing economy market transaction volume increased by 47.2% y-o-y last year, reaching 4.92 trillion yuan (US $778 billion), according to a report by the State Information Center and an industrial association. The booming sharing sector also drew growing investment, with an increase of 25.7% y-o-y in the funding volume last year, reaching 216 billion yuan. The report expected China’s sharing economy to grow by 30% annually in the next five years, with shared services to emerge in the agriculture, education, medical and aged care sectors.
China’s all-important annual “two sessions” will start tomorrow. The 13th National People’s Congress (NPC) and the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) will discuss and revise some of the framework regulations. Key points to be discussed includes the economic growth target, reform and opening-up, and poverty alleviation.
Ye Jianming, chairman and executive director of CEFC China Energy Company Limited is reported to be under investigation by the Chinese government today.
CEFC China Energy is a private enterprise with major business in energy and finance. The company has been active in overseas acquisitions and China’s ambitious Belt and Road Initiative. Last year, the company has tapped into markets in Europe and the Middle East. One of the biggest deals was in September last year, when it acquired 14.16% stake in Russian oil giant Rosneft, becoming the third largest shareholder following the Government of Russia and BP.
Born in 1977, Ye ranked No. 2 on the Fortune 40 Under 40 list in 2016.
China Energy Fund Committee, a Hong Kong NGO sponsored by CEFC China Energy, was also in trouble from late last year, when Patrick Ho Chi-ping, former deputy chairman and secretary general of China Energy Fund Committee and Hong Kong’s former home affairs secretary, was first reported of being under investigation. Ho is now in jail for bribing the president of Chad and the foreign minister of Uganda in exchange for oil rights in the two countries, according to US prosecutors.
China will launch the second phase of a fund for the country’s integrated circuit industry. Chinese media says the second phase aims to attract a total investment of 150 billion yuan to 200 billion yuan within this year. China’s central government, the state-owned enterprises and local governments will invest in the fund. The first phase of the fund has attracted 20 companies including ZTE and Semiconductor Manufacturing International Corporation (SMIC).
Suning.com has announced its financial performance in 2017. With a net profit of 4.2 billion yuan, the company scored at nearly 500% growth compared to that of 2016. The revenue of the company reached 187.9 billion yuan in 2017, marking an increase of 26% y-o-y.
Founded in 1996, Suning Commerce Group is one of the largest non-government retailers in China, headquartered in Nanjing, Jiangsu Province. The Group has more than 1600 stores covering over 700 cities of China (including Hong Kong) and Japan. Its e-commerce platform, Suning.com ranks among top three Chinese B2C companies.
Taiwan enterprises will be treated the same as Chinese private enterprises when it comes to participating in the state-owned enterprise's reform, according to new rules issued by the Taiwan Affairs Office, National Development and Reform Commission and other 27 interested departments. The supportive regulations relating to China’s strategy of “Made in China 2025” are also applicable to Taiwan enterprises, according to the rules. Taiwan enterprises are also encouraged to relocate to central, western and northeastern parts of mainland China. The financial cooperation between Taiwan and mainland China regarding small amount payment, credit investigation and syndicated loan is encouraged.
Qihoo 360, a major player in Chinese Internet security industry, officially listed on Shanghai Stock Exchange today, becoming the first Chinese company to complete the transformation from a foreign private enterprise into a Chinese A-share company. Founded in 2005, Qihoo 360 Technology Co. Ltd., is known for its software including antivirus software, web browser, and mobile application store. In 2011, the company went public in New York. In 2015, the company started its privatization and completed the process in 2016, when Qihoo 360 delisted from New York Stock Exchange. The current biggest shareholder of Qihoo 360 is Tianjin Qixin Zhicheng Technology Co., Ltd, with 48.74% of the company’s share in hand. Qihoo 360’s founder and CEO, Zhou Hongwei, holds 12.14%, being the second largest shareholder.
Hangzhou Robam Appliances has announced their financial performance during the past year. With a revenue of more than 6.99 billion yuan, the company scored a growth of 21% y-o-y in 2017. The net profit increased by 20% last year, hitting 1.45 billion yuan. These figures are relatively weak compared to the yearly growth rates of net profit during 2012-2016, when Robam scored a growth of more than 25% in each of these four years.
Founded in 2000, Hangzhou Robam Appliances Co., Ltd. is one of China’s major players in the manufacture and sales of small kitchen appliances. Its products are mainly used in kitchen operations such as cooking and sterilization. The products include range hood, gas stoves, disinfection cabinet, electric pressure cooker, induction cooker, electric kettle, electric juicer, food processing machine, etc.
China will deepen the reform in the railway industry by increasing the pilot companies in this industry for state-owned enterprises’ mixed-ownership reform. China Railway Corporation, the country’s national railway operator, says it will speed up its reform with new company operating schemes and the introduction of qualified private investment. The results of the reform in the railway industry has been positive, according to Chinese state-owned media. The rail freight capacity has increased by more than 10% y-o-y in 2017, reaching 3.69 billion yuan (US $585 million).
The industry of baijiu (白酒, Chinese white wine) has entered a new stage of development, according to Yuan Renguo, Kweichow Moutai’s chairman. The market will recover and speed up its development, Yuan says. He estimates that the market size will exceed 1 trillion yuan (about US $158 billion) in five years. Meanwhile, Chinese analysts have been positive on baijiu-related stocks.
Listed in Shanghai, Kweichow Moutai Co., Ltd. is a partial state-owned enterprise in China, specializing in the production and sales of Moutai liquor, together with the production and sale of beverage, food and packaging material, development of anti-counterfeiting technology, and research and development of relevant IT products.
China Banking Regulatory Commission (CBRC) has revised the regulations on the administrative licensing for foreign-funded banks. The revised regulations call off the approval procedure of foreign-funded banks’ certain business, including securities investment fund custody business, overseas financial management services on behalf of clients and overseas financial management services for clients and corresponding custody services. Following the regulators’ move in last month when a unified market admission code of conduct for foreign-funded banks was rolled out, the revised regulations this time will further open up China’s banking industry, according to CBRC.
China may unveil new asset management rules soon based on statements from the central bank earlier this month, according to the country’s state media. The People’s Bank of China says it has been improving the draft of the new asset management rules and will submit it to the State Council for approval. The new rules might retain provisions such as restricting “non-standard asset” investments and eliminating multi-layer nesting to guard against risks and make the financial sector better serve the real economy, according to China’s state media.
China has been conducting mixed-ownership reforms among state-owned enterprises (SOEs), introducing investment from private companies in SOEs. A special fund for this purpose will be launched during the first half of 2018, according to cnstock.com. The shareholding structure of the fund consists of private and state-owned assets, with state-owned assets taking a large share of 40% to 50%. The total asset under management of this fund will be 950 billion yuan (approx. US$150 billion).
China Banking Regulatory Commission (CBRC) will issue guidance on insurance fraud this April. The guidance aims to bring standardized supervision to the industry and promote anti-fraud technologies. The responsibilities of insurance companies in this context will be clarified, according to CBRC. The guidance will also explain the obligation of regulators and interested institutions in regulating insurance fraud, according to CBRC.
Anbang Insurance Group is to be taken over by China Banking Regulatory Commission (CBRC) for one year and its former chairman Wu Xiaohui to be prosecuted for economic crimes. After being married to the granddaughter of China’s former leader, Deng Xiaoping, Wu founded Anbang Insurance in 2004. In June last year, Wu was reported as being detained. China has been tightening its supervision of the insurance industry since last year when CBRC’s former chairman Xiang Junbo was accused of "serious regulatory violations".
China’s Ministry of Agriculture has been investigating the safety of genetically modified crops. Beijing Dabeinong Technology Group and other six companies were reprimanded for violating industry rules. All seven companies failed to report problems in testing on genetically modified corn.
Beijing Dabeinong Technology Group Co is one of the two agricultural companies on the list for MSCI’s inclusion of the 222 A-share stocks. Founded in 1994, the company engages in the livestock science and technology, planting technology, and agricultural internet businesses. It produces animal feed products; animal health insurance products for the aquaculture industry; biotechnology products and solutions; and corn, rice, and other crop seeds.
China exported 2.2 million tonnes of scrap steel last year, compared to only around 1,000 tonnes in 2016, according to the China Iron and Steel Association. China phased out the production of 140 million tonnes of “ditiaogang” (substandard steel) last year as part of efforts to reduce excess capacity in the steel sector. As a result, scrap steel exports soared in 2017 as domestic demand was dampened. Most exports went to Southeast Asian nations such as Indonesia, Thailand and Vietnam. The biggest sources of exports were eastern and southern coastal provinces including Guangdong, Jiangsu, Zhejiang, Fujian and Hainan.
China’s local state‑owned assets investment platforms will play a more important role in 2018, according to Chinese state-owned media.
There are three channels of state-owned assets investment: through the Chinese government, through institutions authorized by the Chinese government, and through state-owned enterprises (SOEs). Local state‑owned assets investment platforms are the second channel. Through investment and financing, these platforms manage state-owned assets, aiming to inject power into this sector.
Since last year, China has been emphasizing the management of state-owned assets. Before that, the country used to focus more on the supervision of SOEs’ corporate governance.
The senior executives of major Chinese display screen producer BOE have been increasing their shareholding in the company’s stocks on Shenzhen Stock Exchange. Founded in April 1993, BOE Technology Group Co., Ltd. is a major Chinese supplier of the Internet of Things technologies, products, and services. In Q3 2017, the company ranked first in terms of the global market share for large-size screens. With an estimated net profit of 7.5 billion (US$1.18 billion) to 7.8 billion yuan in 2017, the company performed well last year. Senior executives of the company have increased their investments by 768,000 shares in total this month, accounting for a total investment of 4.26 million yuan.
Hong Kong’s stock market will be very active in 2018, with better connectivity with the international community including mainland China, according to HKEX chief executive Charles Li, speaking on the first trading day of the Chinese lunar Year of Dog. Investors have been worrying about the impact of US stock market and geopolitical issues, but the Hong Kong stock market will continue to develop its competitiveness in valuation, according to Li.
HKEX also launched the new Connect Hall yesterday, marking the transformation of the trading hall first opened in 1986. “It is a centrally-located venue at the heart of our financial hub that will help us to better serve our local community through investor education initiatives, exhibits and public seminars,” says Li.
Private capital investment recorded an increase of 2.8% y-o-y in 2017, reaching 3.815 billion yuan (approx. US$601 million), according to National Bureau of Statistics of China (NBS). The country’s private investment has been recovering since March last year, with the implementation of the regulations vitalizing private capital, according to NBS. The growth rate of private investment is catching up with the country’s total investment growth rate, according to NBS.
The Greater Bay Area, which connects and integrates the industries in Guangdong, Hong Kong and Macau, will make efforts to curb the offshore pollution. Guangdong has around 4,114 kilometers of coastline and much of that offshore area is heavily polluted, according to the Guangdong department of environmental protection. Environmental protection institutions will share environment data in the area, actively monitoring risks. According to the plans of the environmental protection authorities, new sewage outlets are banned in protected areas. Nature reserves and scenic areas of Guangdong and the discharge of pollutants will aim to be greatly reduced in heavily polluted areas.
China’s housing rental market was estimated at 1.3 trillion yuan (about $205 billion) in terms of revenue last year, according to Liu Zhifeng, head of China Real Estate Association. The country has been supporting rental market to cool down the housing price and stabilize the real estate sector. Chinese authorities now aim for a long-term mechanism for real estate regulation and a housing system that ensures supply through multiple sources including both housing purchases and rentals. Problems such as unbalanced supply and demand and insufficient regulation still exist, according to the Association, calling for detailed regulations on housing rental and improved standards for management of the sector.
China Insurance Regulatory Commission (CIRC) will tighten its supervision over innovations and reforms in insurance funds investment. So-called “innovations” aiming to elude regulators will be cracked down, according to the regulator. Insurance funds should be invested in projects serving the real economy and national strategy, the regulator emphasizes, encouraging insurance funds to invest in fixed income products.
Ministry of Commerce released the Foreign Direct Investment (FDI) data in January. According to MOFCOM, 5197 new foreign-invested companies were set up in January 2018, 158.6% up from the same period last year. The investments were majority in the technology sector and primarily from Singapore, Taiwan and the US.
JD.com announced that its subsidiary JD Logistics completed a $2.5 billion fund raising. Investors include Hillhouse Capital, Sequoia Capital, China Merchants Group, Tencent and China Life. The deal marks the largest single fund raising in China's logistics industry. Upon the completion of the fund raising, JD.com will still hold 81.4% of JD Logistics.
China Securities Regulatory Commission recently released Foxconn's IPO prospectus. Once the application is approved, Foxconn will become the largest global electronic devices manufacturer listed in China. Chinese analysts believe that the IPO will be approved within six months and Foxconn related stocks will benefit from the IPO.
According to Chinese media, the stock pledging business of Chinese securities companies have been declining recently due to the recent sell-off. To mitigate the potential risk, some Chinese securities companies started to raise the borrowing cost of stock pledging by 50 bps. Some Chinese analysts also attributed the rising borrowing cost of stock pledging to rising onshore financing cost.
Ministry of Finance issued a guidance on the subsidy of new energy vehicles. The guidance set higher standards and qualification of new energy vehicles eligible for subsidy. The guidance also specifies relevant regulatory bodies for setting up the regulatory framework for new energy vehicles. The new guidance was effective on Feb 12 of this year.
The National Development and Reform Commission issued an official list of sensitive industries in terms of outbound investment. In addition to industries which have been restricted including real estate and hotels, weapon equipment, water resource, the media are now listed as sensitive industries. In addition, investment in these companies require investors to disclose the ultimate controller. The new list will be effective on March 1st of this year.
Kweichow Moutai general manager Baofang Li expects the demand and supply disequilibrium will become the norm in China. The company is still looking for the best price of the wine to cater to the market needs. Li said that reaching the sales target of 90 billion yuan in 2018 is not a difficult task.
Although Chinese regulators have already banned bitcoin trading in China, Chinese media has still found bitcoins platforms which facilitate bitcoins trading. Users will be able to use Alipay to make payments. Currently, there are still at least 21 bitcoin platforms running in China, the servers of which are all overseas.
China plans to conduct its mixed-ownership reform in state-owned enterprises (SOEs) in seven areas including power, petroleum, natural gas, railway, aviation, telecommunication and defense. Central SOEs such as PetroChina, China North Industries Group Corporation, China Electronics Technology Group Corporation, China Minmetals, State Grid Corporation of China, Power Construction China, China Energy Investment, China Huadian Corporation, State Power Investment Corporation and Ansteel Group have announced their reform plans. The reform in power industry is a major focus in 2018, according to Chinese media.
China has seen robust growth in imports and exports of goods in January, while its trade surplus with the United States shrank amid rising China-US trade tensions, according to the country’s the General Administration of Customs (GAC). The country’s imports surged by 30.2% y-o-y to 1.19 trillion yuan last month. Its exports increased by 6% to 1.32 trillion yuan, according to the GAC. China’s robust export indicates steady global demand momentum, according to Chinese media.
China’s producer price index (PPI), which measures costs for goods at the factory gate, rose 4.3% y-o-y in January, according to the National Bureau of Statistics says today. The index is down from a growth of 4.9% recorded in December, according to the bureau.
China and the Netherlands yesterday agreed to carry out more mutually beneficial cooperation through joint implementation of the Belt and Road (B&R) Initiative in 2018. China’s President Xi Jinping suggested the two sides carry out more mutually beneficial cooperation through the Belt and Road construction. Dutch King Willem-Alexander said the Netherlands is willing to participate in the first China International Import Expo, which is to be held in Shanghai from Nov 5 to 10 this year.
China has formed an overarching framework for the country’s next round of opening-up, according to the country’s state-owned media. Banking, securities and insurance will be the key focus of the opening up of the country’s financial sector. The opening-up might exceed market expectations, according to the media. China’s stock market and the bond market will be further opened up. The mechanism of the Bond Connect will be improved; the discussion over Shanghai – London Connect will be carried forward.
Three Chinese telecom operators, namely China Mobile, China Unicom, and China Telecommunications Corporation, is planning and testing 5G projects. China Mobile plans to set up 500 stations for 5G in major cities such as Beijing, Shanghai, Shenzhen, etc. In addition to the operators, telecommunications equipment and system company, ZTE, launched a fundraising last week for researching and developing the 5G technology. Local government such as Beijing, plan to advance their smart city construction, and are testing on 5G technologies.
China has been promoting the housing rental industry recently. The country's National Development and Reform Commission (NDRC) has recently announced that it will support professional and institutional companies in the housing rental industry. Long-term housing rental loans will be encouraged, according to NDRC. Chinese banks, including Bank of China, China Construction Bank and Industrial and Commercial Bank of China, have been issuing housing rental loans or providing relevant services.
Some of the companies listed in A-share market have been giving irrational reasons in their statement for their declining performance, according to China Securities Regulatory Commission (CSRC). The regulator says they will follow up on such practice to protect the investors. The supervision of China’s listed companies will be enhanced, according to the regulator.
National Internet Finance Association (NIFA) has signed a memorandum with a UK association, Innovate Finance, to enhance the cooperation between the two parties in financial innovations. The technology and resource of UK’s Internet finance sector will help Chinese companies going overseas, according to NIFA. The two parties will meet regularly, holding events and training programs.
Agricultural Development Bank of China (ADBC) plans to lend about 100 billion yuan ($15.9 billion) by 2020 to support the maritime economy. The financing will mainly go to modern fisheries, strategic and emerging maritime sectors such as maritime medicine and renewable energy, as well as infrastructure and public services, according to guidelines issued by the State Oceanic Administration and ADBC. This announcement came about 10 days after the country’s central bank and other government agencies decided to strengthen financial support for China’s maritime economy by increasing bank loans and diversifying financing channels.
China will crack down on the illegal practices in forex this year. State Administration of Foreign Exchange (SAFE) says it will pay particular attention to those illegal practices in the name of innovation. But legal innovation will continue to be supported, according to SAFE. The regulator will also enhance its cooperation with Ministry of Public Security in supervising the forex market.
China’s official new rules on asset management will be issued soon, according to a source talking to yicai.com, noting that it will be possibly issued before the annual plenary session of the National People's Congress (NPC) in March. A draft regulation on asset management was issued last year. The official regulation will be more rigorous, according to the source.
The Asian Infrastructure Investment Bank (AIIB) will enhance cooperation with Hong Kong in boosting the Belt and Road (B&R) Initiative, said Jin Liqun, the bank’s president. “We are willing to strengthen cooperation with the Hong Kong officials, financial institutions, relevant agencies and enterprises to further promote the initiative, thus contributing to economic expansion in Asia, as well as the global economy,” said Jin. Key areas of cooperation will include commerce and trade, industrial development, science and technology, according to the bank.
China has announced that it has allowed direct trading between the renminbi and the Thai baht on its interbank foreign exchange market beginning today (February 5). The move aims to boost bilateral trade and investment, facilitate the use of the two currencies in trade and investment settlement, and reduce exchange costs for market players, said the China Foreign Exchange Trade System (CFETS) in a statement. Previously, trading between the yuan and the baht was only allowed in regional interbank markets.
Shanghai International Group, together with three former executives from Credit Suisse, have set up a European buyout fund on February 2. The fund will be managed by an equity investment management company in Shanghai (上海美丽境界股权投资管理有限公司). The fund plans to raise 3 billion yuan in the first tranche, investing in medium size in Europe, especially those can serve the manufacturing upgrading of China. The second tranche (3 billion yuan) of the fund will be launched during the second half of this year.
Since LeEco's stock resumed trading in January, its stock price has been dropping by 10%; reaching the daily price drop limit for eight consecutive days. According to Chinese media, the management of LeEco has been going through the relevant bad debt. The significant price drop raised concerns over the switch of control of LeEco, as the founder Yueting Jia's holdings in the company can be liquidated as a result of margin cut.
A public note from China State Shipbuilding Corporation (CSSC) draws market attention towards the possible merger of CSSC and China Shipbuilding Industry Corporation. According to CSSC, it is expecting to receive an approval letter from State Asset Supervision and Administration Commission in February. CSSC has seen profit decline in 2016 and is likely to see a further decline in its 2017 financial report.
China National Nuclear Power Co has merged with China Nuclear Engineering Group Co., marking the third restricting project since China started its central state-owned enterprise (SOE) reforms. This is also the first central SOE to reform in 2018. The number of central SOEs under the control of State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has been reduced to 97 so far. Chinese regulators have disclosed the third batch of pilot projects in the SOE reforms, including 10 central SOEs and 21 SOEs, whose reform plans are under discussion.
China Development Bank (CDB) will implement a special purpose loan of 250 billion yuan this year, serving the construction along the Belt and Road (B&R) Initiative, according to Zheng Zhijie, Vice Chairman and President of CDB. In addition, CDB has signed a memorandum with Standard Chartered, promoting the cooperation of the two parties in the B&R projects. The two parties agreed to conduct a cooperation worth 10 billion yuan in the next five year. This will boost the internationalization of the renminbi, according to CDB.
Tencent has signed an agreement with Xi’an local governments in setting up a town for mass entrepreneurship and innovation in Xi’an. With a total investment of 16 billion yuan, the project will integrate functions including research and development, hatching, industrialization, training, attracting investment, etc. Cloud computing, Internet plus and other 9 industries will be the major focuses of the project which plans to attract more than 500 enterprises. At least 10 of these enterprises will be listed companies.
Some of the Chinese banks have stopped lending to property developers, according to a source speaking to cs.com.cn. Regulations in the real estate sector have been increasingly tightened, according to the source, noting that this sector is one the major focus of China’s regulation and control targets. “Trust companies have done a lot of real estate financing business last year. But now, companies are becoming more cautious,” says the source.
A Memorandum of Understanding was signed between China Railway Corporation (CR) and the Hong Kong Special Administrative Region (HKSAR) government, to arrange the key work during the trial operation of the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail. Hong Kong section of the Rail will be in operation in the third quarter of this year, according to HKSAR Chief Executive Lam Cheng Yuet-ngor
An index tracking China’s entrepreneurial environment increased in recent years, indicating a more mature ecosystem for innovation, according to a report from Tsinghua University. The aggregate index for entrepreneurial environment climbed from 2.87 in 2010 to 3.1 during the survey period from 2016 to 2017.
Entrepreneurs surveyed reported significant improvements in financial and policy support as well as better social and cultural standards. Young entrepreneurs aged 18 to 34 were the most active innovators, accounting for 44.4 percent of the total.
“China’s financial system is seriously distorted,” says Lou Jiwei, chair of the National Council for Social Security Fund (NSSF). The possibility of a financial systematic risk breaking out in China is very high, according to Lou. China’s financial market is complex, with interbank financing, cash pooling, universal life insurance products, P2P loans, and payday loan adding to the risk of the market, according to Lou.
China’s annual plenary session of the National People's Congress (NPC) will start on March 5. Held in Beijing, the member of the NPC will discuss and decide framework policies of China and elect the officials of state institutions.
The Agricultural Development Bank of China (ADBC), one of the country’s three policy lenders has offered loans of over 859 billion yuan last year for agricultural and rural infrastructure development, according to a recent statement by the bank.
The loans covered major fields in rural infrastructure sector including shantytown transformation, water conservancy, and road and environmental protection projects. Housing renovation in the rural area took about half of the overall lending, with a total loan of 427.4 billion yuan.
Listed companies in China reported rapid profit growth in 2017 as the country’s supply-side structural reform began to bear results, according to state-owned Xinhua News Agency. So far, over half of the listed companies on the country’s two major exchanges have reported their 2017 performance, and nearly 70% of them saw profit gains, according to Shanghai Securities News. Most companies in traditional sectors such as coal and steel showed strong growth on the back of the country’s economic restructuring and business environment improvement, according to Xinhua, noting that 19 out of 20 companies in the coal sector saw profit growth.
Ministry of Finance (MOF) has recently established a fund for the development of the agricultural industry with a proposed 50 billion yuan in asset. MOF has already invested 8 billion yuan in the fund. The fund will attract private capital, according to the regulator.
People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission and State Oceanic Administration have jointly issued a guidance to boost the financial service in the marine economy. Qualified companies in the marine related sector will be encouraged to list on the main board; banks are encouraged to set up financial departments serving the marine economy; the insurance funds are welcomed to invest marine economy related projects.
The regulators will enhance the financial services in the marine economy, guiding the sector to form a developing mode of quality oriented efficiency.
The National Development and Reform Commission (NDRC), People's Bank of China and Ministry of Finance have jointly issued a notice on banks’ debt-to-equity swap. Qualified institutions are allowed to set up private equity funds to marketize the debt-to-equity swap; listed companies or unlisted public companies are allowed to issue equity financing tools to marketize the debt-to-equity swap, according to the notice. Relevant innovations are also encouraged, according to the notice.
Hong Kong Exchanges and Clearing (HKEx) hopes to implement the London-Hong Kong stock connect next year, according to Charles Li chief executive of HKEx Group. Plans for the stock connect started in 2015 but was put on hold in 2016 due to uncertainties around Brexit. According to Li, the discussions will hope be restart after March 2019.
China’s Ministry of Commerce, People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission have jointly issued a draft regulation to supervise the overseas investment of Chinese companies. A much-tightened supervision over the overseas investment will be deployed out. Regulators will focus on investment over 300 million yuan, according to the regulation.
Guangdong plans to implement several projects relating to the Greater Bay Area. The Guangdong government is seeking to set up free trading ports. Several projects of transportation construction will be deployed this year.
China Banking Regulatory Commission (CBRC) emphasizes again that it will further crackdown on illegal practices in the financial sector. Corporate governance and shareholding will be one of the regulator’s focus points. “Some of the shareholders are establishing illegal financial groups and turning banks into their ATM machines by violating the regulations,” says Guo Shuqing, chairman of CBRC. The regulator will supervise the market with stricter penalties, protecting consumers’ rights. The financial sector will be boosted in order to provide better services to the real economy.
China’s financial and manufacturing sectors will be further opened up, according to Liu He, general office director of the Central Leading Group for Financial and Economic Affairs, speaking on the World Economic Forum held in Switzerland. China welcomes enterprises from Switzerland to invest in China, according to Liu. China also seeks deeper cooperation with Switzerland in customs, cross-border e-commerce, and financial sectors.
China’s State Council has issued a proposal to enhance the collaboration between the e-commerce and logistics sectors. The country will improve the infrastructure of the two sectors, according to the proposal. Technologies in big data, cloud computing and robotization will be more widely used in the two sectors, according to the proposal, noting that information sharing will be encouraged.
China’s private sector has been significant to the country’s economic growth, according to China’s President Xi Jinping. There are 65.79 million individually-owned businesses and more than 27.26 million private enterprises which employ 341 million people as of the end of 2017. The private sector is expected to make a greater contribution to the country’s economy with new regulations expected to come out soon. The business environment of this sector will be improved with better administration services and lower fees and taxes, according to Chinese Premier Li Keqiang.
China’s central government’s annual “No. 1 Document” will focus on the revitalization of the rural regions and supply-side reform in the agriculture industry, according to a source talking to cnstock.com. Green agricultural products are highlighted, according to the source. An improved financial system serving the rural regions and agriculture industry will be deployed, and relevant financial innovations are encouraged, according to Chinese regulators previously.
China will advance the mixed-ownership reforms in the traditional industrial zone in north-eastern parts of the country, according to National Development and Reform Commission (NDRC). Pilot reform projects will be rolled out in this region and the investment environment will be improved, according to the regulator. The investment environment rankings of major cities in this region range from the 20th to 30th among all the cities in China, according to Chinese media.
Chinese regulators are discussing a development strategy for the intelligent car industry, according to National Development and Reform Commission (NDRC). Interested institutions and enterprises are encouraged to innovate and cooperate in this field. An innovation platform for the intelligent car industry will be established, according to NDRC, noting that enterprises from automotive, IT, Internet, and financial sectors should collaborate to ensure the implementation of the intelligent car development strategy.
Inner Mongolia autonomous region will set up a fund of 30 billion yuan for upgrading state-owned enterprises (SOEs), according to Xinhua News Agency. The fund is invested in by the government of Inner Mongolia and four other institutions, according to the local office of State-owned Assets Supervision and Administration Commission of the State Council.
The Shenzhen Stock Exchange will continue to reform in the Growth Enterprise Market. Qualified innovative and start-up companies are encouraged to do Initial Public Offerings (IPOs), according to Shenzhen Stock Exchange. Companies with businesses that comply with China’s development strategy will be supported. Fintech innovation will be one the major focus, according to the bourse.
The total value of the logistics industry in China is predicted to reach 280 trillion yuan in 2018, an increase of 6.5% y-o-y, according to a report by Chinese Academy of Sciences. The total revenue of the logistics industry is expected to exceed 9 trillion yuan in 2018, according to the report. Investments in transportation, warehousing and postal industry will maintain a growth of 10% in 2018, according to the report. The development in the high-end manufacturing industry and the consumption boom is driving the demand for logistics services, according to report.
China’s economy has grown by 6.9% in 2017, according to the country’s State Council. This marks the first time during the past seven years that the country’s economic growth rate has picked up, according to Xinhua News Agency. The country’s GDP totaled 82.7 trillion yuan (about $13 trillion) in 2017.
China will soon shift its SOE reform plan to the defense industry, according to Chinese media. Major Chinese regulators including the National Development and Reform Commission (NDRC), Ministry of Education and Ministry of Science and Technology have jointly issued a notice to advance the mixed-ownership reforms in the country’s defense industry. The notice also encourages the cooperation and innovation in integrating the state-owned defense companies and private enterprises. Defense companies should share their advanced technology, and private companies should share their corporate governance experience, according to the notice.
SAFE (State Administration of Foreign Exchange) will encourage enterprises to improve their risk management systems in 2018, promoting the reforms in exchange rate formation mechanism. SAFE will also diversify the products and participants of the forex market and expand the transaction scope. The regulator will further open up the market, improving the service and competitiveness of China’s forex market.
The Chinese government will continue to reduce the subsidies of new cars this year, according to a source talking to China Daily. The plan of cutting new energy car subsidies was raised last year. It was not until recently that interested parties including the Ministry of Finance and Ministry of Industry and Information Technology reached an agreement, according to the source. The subsidies is expected to be eliminated since 2020, the source adds.
National Development and Reform Commission (NDRC) encourages central state-owned enterprises (SOEs) to increase its capital strength by equity financing and debt-to-equity swap. In order to deleverage and control the risks, NDRC has set up warning lines of enterprises’ debt-to-assets ratio. The debt-to-asset ratio of industrial enterprises should not exceed 70%, non-industrial enterprise 75% and research and development enterprises 65%.
China will continue to curb the real estate bubbles, according to Guo Shuqing, chairman of China Banking Regulatory Commission (CBRC). The regulators’ attitude towards real estate is certain, according to Ministry of Housing and Urban-Rural Development, emphasizing again that houses are not for speculation. The regulators aim to form a virtuous cycle among real economy, financial sector and real estate sector, according to Guo.
China’s Liaoning Province and Shandong Province are planning to establish free trade port, according to Economic Information Daily. The local government of Liaoning has already submitted the application of setting up a free trade port in its coastal city of Dalian; Shandong is planning to locate the port at Qingdao, according to the media. China has been encouraging setting up free trade ports since last year. Applications from Shanghai, Zhejiang, Liaoning, Shandong, Fujian and Guangdong are being processed.
Hong Kong Exchanges and Clearing (HKEx) hopes to launch derivative products of A-shares this year, according to chief executive Charles Li Xiaojia. “The trading volume through the stock connects has increased from 2016’s HK $68 billion to last year’s HK $88 billion. With A shares to be included in MSCI in the middle of this year, 2018 is a good time for HKEx to launch A-share derivatives,” says Li.
Qualified companies operating in regions with high poverty will enjoy favorable regulations when doing initial public offerings (IPOs), according to a guidance issued by People's Bank of China (PBoC) and interested departments. Faster processing of IPO applications from these particular companies are expected. This will boost the financial institutions' lending to the poverty regions, according to Chinese media, noting that China aims to establish a credit system covering all the poverty regions by 2020.
China’s State Grid plans to establish an electric vehicle network of 120,000 public charging piles for electric cars by 2020. The network will cover the Beijing, Tianjin, Hebei, Shandong and Yangtze River Delta cities, together with major cities in other regions, says State Grid Corporation of China. China has the world’s largest new energy auto industry with an estimated sales volume of 577,000 units last year. “Starting 2020, electric cars are likely to go beyond their nature as vehicles, and become a basic unit of the energy system,” says Jiang Bing, chairman of the company.
China’s largest LCD glass substrates producer, Dongxu Optoelectronic Technology has signed a cooperation agreements with institutions from Japan, Thailand, Malaysia, Indonesia and Mongolia in constructing smart cities. Dongxu Optoelectronic Technology will initiate a managing platform based on the Internet of things (IoT) for smart cities. The platform will include technologies such as big data, cloud computing, graphene and new energy car.
Founded in 1992, Dongxu Optoelectronic Technology Co., Ltd. is the world’s fourth largest LCD glass substrates producer. The company also taps into new sectors including new energy car and technologies relating to smart city construction.
China’s Silicon Valley, Beijing’s Zhongguancun Science Park, has made 4.2 trillion yuan of revenue during the first 11 months of 2017, recording a growth of 14.2% y-o-y, according to Beijing Municipal Bureau of Statistics. This is driven by the growth of companies in areas including electronics and information, bioengineering and medicine, advanced manufacturing, environmental protection, and energy-saving. The research and development investment of Zhongguancun grew nearly 18% y-o-y during the same period, reaching 144 billion yuan.
China will be releasing its 4Q and 2017 full year GDP this week. The country’s Premier Li Keqiang recently disclosed that economic performance has surpassed expectations with 6.9% growth in 2017. According to Chinese Academy of Social Sciences, the expectation of GDP growth for this year will be 6.7%. But early this month, the country’s Inner Mongolia Autonomous Region has announced that it has inflated its industrial data by 40% and fiscal revenue by 26% in 2016. Tianjin Binhai New Area, a special economic zone, has also revised its 2016 GDP down 33.4% to 665.4 billion yuan. They are not the first Chinese local governments that admit cooking its GDP data. In January 2017, Liaoning Province admitted that it inflated its GDP figures during 2011 to 2014.
The past year has seen a 14.2% increase in China’s total export and import volume, putting an end to the consecutive decrease during the previous two years, according to China Customs. One of the major drivers is the country’s increasing export and import volume with the countries along the Belt and Road Initiative, according to China Customs. However, the double-digit growth momentum will be difficult to maintain in 2018 according to China Customs.
National Development and Reform Commission (NDRC) says that some of the Chinese central state-owned enterprises (SOEs) are violating rules by making short-term loans and providing external guarantees. Some of central SOEs’ subsidiaries are carrying out illegal trade financing, according to NDRC. The regulator also points out that some of the SOEs fail to integrate its subsidiaries, causing the overlap of management and horizontal competition. NDRC will strengthen the supervision of SOEs with a focus on the issues mentioned.
SANY Heavy Industry has announced that the company's largest shareholder, SANY Group, and its persons acting in concert, have reduced 75 million shares in the secondary market, accounting for a reduction of 5.24%. This has not impact the valuation of SANY Heavy Industry’s stock too much, according to Chinese media.
Sany Heavy Industry is a Chinese multinational heavy machinery manufacturing company headquartered in Changsha, Hunan Province. Founded in 1989, SANY has now become the sixth-largest heavy equipment manufacturer in the world.
Chinese electronics and software company Xiaomi Inc. has been talking to investment banks in Hong Kong and will soon announce its underwriters for listing in Hong Kong, according to a source talking to yicai.com. Headquartered in Beijing, Xiaomi designs, develops, and sells smartphones, mobile apps, laptops and related consumer electronics. The company will be among the first batch of companies that will go public under Hong Kong’s weighted voting rights structure, according to yicai.com. In 2017, the number of the newly listed companies on Hong Kong Stock Exchange was 174, up 38% compared to 126 in 2016.
China will establish a mechanism of industrial Internet by 2020, according to Ministry of Industry and Information Technology (MIIT). The mechanism will include about 10 multi-industry platforms supporting the digitalization, networking and intelligent production of Chinese enterprises. The mechanism will also support Chinese industrial enterprises to develop software applications.
Chinese AI leader iFlytek has announced its cooperation with China’s largest national home improvement and furniture retail platform Red Star Macalline. Robots with biometric recognition functions will be deployed to Red Star Macalline’s stores as shopping guides. Founded in 1999, iFlytek is a Chinese information technology company listed in Shenzhen. The company creates voice recognition software and other voice-based internet or mobile products covering education, communication, music, intelligent toys industries. China Mobile holds 12.9% of iFlytek’s shares as of end September 2017.
China is considering giving the ok to high-quality companies involved in the Belt and Road Initiative to raise funds through yuan-denominated initial public offerings (IPOs) in Hong Kong's stock market. This move would strengthen Hong Kong’s role as a renminbi offshore hub, according to Chinese media. The Chinese government plans to select certain companies and facilitate their fundraising in the offshore market, but the detailed timeline for the plan remains under discussion.
The number and the value of initial public offerings (IPOs) on China’s two bourses hit a record high in 2017. A total of 438 companies launched IPOs on the Shanghai and Shenzhen stock exchanges in 2017, up 93% from 2016, according to Chinese financial information services company Wind. The value of IPOs last year was 230 billion yuan, up 56% y-o-y.
Oriental Pearl Group has announced today that it will cooperate with China Unicom in areas including content, channel, hardware and service, promoting the “Entertainment plus” strategy. The two parties will innovate in areas such as home entertainment. The two parties will also cooperate in terms of capital and equity, jointly investing in new business and innovation projects.
Founded in 1992, Oriental Pearl Group is a cultural company engaged in touring, radio and TV transmission service, media investments, advertising, video game console manufacturing, software developing, and real estate investments. Based in Shanghai, the company is listed as one of the 50 pivotal large-scale enterprises by the Shanghai government.
China Insurance Regulatory Commission (CIRC) has recently drafted new rules regarding the cashing out of insurance policies. The new regulation allows pilot insurers to offer cashing out business. Policyholders needing emergency funds can sell their life insurance policies to investors through certain institutions. The draft regulation prohibits reselling the sold policies.
China has recently issued a new guidance on the mixed ownership reforms of the country’s state-owned enterprises. This year will be a breakout year for these reforms, according to Chinese media, noting that the coal industry will speed up its reforms.
Eleven coal related enterprises including China Shenhua, China Coal, China Guodian Corporation, SDIC, and China Poly are said to be active in these reforms this year, according to Chinese media.
Investment and consumption will be the two engines to drive China’s economic growth in 2018, according to a recent report by Economic Information Daily. Driven by the manufacturing and the primary sectors, fixed-asset investment is projected to grow at around 6.5% while consumption is expected to reach 10% this year boosted by increasing residential income, says the report.
People's Bank of China (PBoC) says recently that higher interest rates will help squeeze asset bubbles and restrain debt expansion. “There is room for an increase in interest rates in the short term as industrial product prices and enterprises’ profitability have improved since last year,” Ji Min, deputy head of the PBoC’s research bureau. Inflation and foreign exchange rates also have to be factored in before adjusting interest rates, Ji said.
China has recently established an open financial cooperation mechanism to help revitalize the traditional industrial zone in northeastern China which is also known as the rust belt. More than 40 financial institutions, including the China Development Bank and the State Development and Investment Corp, are involved in the newly set-up system. It aims to bridge government agencies, financial institutions and local governments and enterprises in northeast China to help boost the rust belt.
Wuliangye, the well-known Chinese liquor-producer in Sichuan province has become a shareholder of a carmaker. Push Group, a subsidiary of Wuliangye Group Co in Sichuan. The comapny has acquired a 0.5% stake in Cowin Auto, a brand of Chery Automobile. The acquisition was part of a deal package in which Chery sold a 51% stake for 2.49 billion yuan, according to Chery’s statement.
Founded in 1998, Wuliangye distributes its products mainly in the domestic market.
China Banking Regulatory Commission (CBRC) has issued new regulations on foreign banks’ admission into Chinese market. The new rules set a clear standard for foreign banks getting approvals from Chinese regulators. This move will help to further open up China’s financial market, says CBRC, noting that the new regulations simplify relevant administration processes.
Some Chinese banks are suspending their public-private partnership (PPP) funding projects, according to 21jingji.com. Many of the suspended projects are postponed to March of this year, according to the media. Chinese regulators have not made any official announcement to this.
China’s Insurance Regulatory Commission (CIRC) has issued new regulations to curb implicit public debts of Chinese local governments. Insurance companies are prohibited to promise explicit returns when setting up equity investment plans. The regulations also clarify that insurers are forbidden to participate in the shadow banking system.
Chinese pharmaceutical company Beijing Tongrentang Co., Ltd opens its first store in Switzerland. Located in Geneva, the new store offers traditional Chinese traditional treatments including acupuncture, cupping, and massage.
Founded in 1669, Beijing Tongrentang is a brand known for manufacturing and selling traditional Chinese medicine. Beijing Tongrentang Co., Ltd operates a hospital in Beijing. Headquartered in Beijing, the company operates about 130 stores in 26 countries and regions globally.
China’s banking system will go through a number of reforms in an effort to further open up. The change will focus on supply-side structural reforms, China Banking Regulatory Commission (CBRC) says during the annual Central Economic Work Conference which sets the economic policy tone for the coming year. The regulator also warns about possible risks in the sector including the debt risks of local governments and risks in the real estate sector.
China’s Belt and Road Initiative will roll out four major rail projects simultaneously in 2018, accounting for a total investment of US$40.27 billion (164 billion ringgit). These projects include the 50 billion to 60 billion ringgit Kuala Lumpur to Singapore high-speed rail (HSR), 55 billion ringgit East Coast Rail Line (ECRL), 40 billion ringgit Mass Rapid Transit 3 (Circle Line), and the 8.9 billion ringgit Gemas to Johor Baru electrified rail double tracking.
China Development Bank (CDB) has issued a specialized bond for the Belt and Road (B&R) initiatives. The bond is a five-year fixed rate bond worth US$ 350 million, listed on Hong Kong Stock Exchange. This is the first specialized bond for B&R issued by CDB. The money raised will be used to support projects along B&R, marking an innovative cooperation with Hong Kong’s financial market, according to Chinese media.
The government is likely to maintain a neutral monetary policy in 2018 and will not become more stringent than this year in order to stem a slide in economic growth, according to researchers of Chinese Academy of Social Sciences, a leading think tank advising the government. China needs to deepen its reforms in financial sectors, says Xu Zhong, Director General, Research Bureau of the People's Bank of China. “The financial security will be generated from reforms rather than maintenance,” says Xu.
The annual Central Economic Work Conference which sets the economic policy tone for the coming year has recently concluded. Key takeaways from the event include the maintenance the sustainable development of the financial and real estate sectors. Avoiding unexpected risks will be China’s economic policy priorities next year. These measures are seen as key objectives to safeguarding China’s economic stability, according to Chinese media.
Zhong De Securities, a joint venture securities company set up by Deutsche Bank and Shanxi Securities, has faced difficulties in their IPO business. Over the past two months, four IPOs sponsored by Zhong De Securities were rejected by the China Securities Regulatory Commission (CSRC). Since the new IPO review committee was appointed two months ago, the approval rate has been low. Only 47 out of 79 companies have received approval from the CSRC.
The Chinese ride hailing leader Didi successfully acquired a payment license in China through purchase of a payment company. Didi is now the only ride hailing company with a payments license. It is expected that apart from the traditional ride hailing business, Didi will enter the financial services market in the future.
According to Chinese media, the Asset Management Association of China (AMAC) will no longer disclose the money market fund size information and will not include the size of money market fund into asset management companies’ AUM. Market analysts believe that it shows authorities have started to emphasize the active management capability of Chinese asset management companies. Data from AMAC shows that the AUM of money market funds almost doubled in first ten months. It is likely that asset management companies with large money funds such as Tianhong AMC and ICBC credit Suisse will be largely affected.
Qingdao Haier plans to inject capital into one of its overseas subsidiaries, Haier US Appliance Solutions, Inc. Qingdao Haier indirectly holds 100% of shares in US Solutions. This percentage will be maintained after the injection.
Qingdao Haier a subsidiary of Haier Group, was established in 1989. It has a total asset of 131 billion yuan as of end 2016. Founded in 1984, Haier Group is the world’s leading brand of major household appliances.
The mixed-ownership reform of Chinese state-owned enterprises (SOEs) is speeding up, according to State-owned Assets Supervision and Administration Commission of the State Council (SASAC). Central SOEs’ reforms are all approved, says the regulator, noting that 87 central SOEs have set up boards of directors.
National Development and Reform Commission (NDRC) is to issue a code of conduct for state-owned enterprises making outbound investments. China has been tightening its control of outbound investment. The code is seen as one of the measures to protect the nation’s financial security, according to Chinese observers. Private enterprises are encouraged to invest overseas, but risks still exist, according to the NDRC, noting that a code of conduct for private companies regarding outbound investment will also be issued.
China will further tighten its supervision on insurance companies in order to reduce the risk in the sector, according to China Insurance Regulatory Commission (CIRC). Insurance companies will be rated from A to D by CIRC based on their ability to ensure the matching of maturity, cash flow and cost on both sides of their balance sheets. Companies with the rating of D which is the lowest will be banned from applying to launch new products within a certain period. Salaries of the top management of these firms will also be restricted.
China will set up funds totaling 50 billion yuan to invest in the Belt and Road (B&R) infrastructure and industrial projects in Southern China’s Guangxi region and ASEAN countries. The funds will be established by an investment arm of China Development Bank (CDB) and Guangxi Investment Group, according to the CDB. China Minsheng Bank estimates that infrastructure financing demand along the B&R will amount to US$10 trillion in the next five years.
China will set up a model area for sharing economy, according to National Development and Reform Commission (NDRC). The regulator has issued a new notice on this, noting that the area will focus on fields including innovative sharing and productivity sharing. Qualified industries will be supported, according to the notice.
Hong Kong has signed a new agreement with Beijing regarding the Belt and Road (B&R) Initiative. Mainland will support “relevant parties” to use Hong Kong as a financing platform for infrastructure construction along B&R; the green bond market in Hong Kong will be further boosted; Hong Kong’s position as the global renminbi offshore market will be strengthened, according to the agreement. Hong Kong and mainland will also further cooperate in areas including airports, ports, railways and roads, according to the agreement.
Hong Kong government today has revealed its plan for the next five years on upgrading Hong Kong into a smart city. Next year, Hong Kong will focus on developing a “fast payment system”. Virtual banks will also be introduced as a new financial service channel.
The People’s Bank of China will not shrink the balance sheet and nor will it increase the benchmark interest rates on deposits and loans, according to Sheng Songcheng, an adviser to the PBoC. “There is no such thing as shrinking balance sheet for China,” says Sheng, noting that China’s interest rate is now “very high”. Sheng thinks that China’s monetary policy should be steady. According to Chinese economists, the country will tighten its monetary policy next year while increasing policy flexibility to ensure sufficient credit supply.