SAFE eases regulations for special economic zonesMay 24, 2013
China's State Administration of Foreign Exchange (SAFE) announced that it will ease regulations of foreign currency transactions for firms operating in special economic zones in the country. The simplified regulations now allow companies to take legal profits derived from exports out of the country, as long as they are located in special economic zones. The new rules, which will take effect in June, will also cut down paperwork requirements and reduce the frequency of regulatory checks.
China to pilot five private banksMar 11, 2014
The more prosperous regions of Tianjin, Shanghai, Zhejiang and Guangdong will see the launch of five privately-owned banks, which are part of a pilot test to see how privately-financed banks will perform before the practice is extended to other places. Ten private companies, including internet firms Alibaba and Tencent, have been selected to take part in the preparation work for setting up the banks, said the China Banking Regulatory Commission. The trial is the first tentative step by the country to open its closely-guarded banking sector to private investors. Setting up private banks in China was written into an ambitious reform package rolled out after a key plenum of the Communist Party of China Central Committee in November.
Chinese banks lending beneath market estimates in FebruaryMar 11, 2014
The banks in mainland China were lending under market expectations in the second month of this year as economists put the blame on a weak business momentum plus the nation’s central bank regulating risk control. The country’s new yuan-denominated lending was at Rmb644.5bn (USD105bn) in February, or below 50% of a four-year high of Rmb1.32tr (USD220bn) in January, according to the People’s Bank of China.
China's agricultural insurance market is world's second largestMar 11, 2014
The country's insurance regulator, the China Insurance Regulatory Commission (CIRC), revealed that China's agriculture insurance market has become the world's second largest after the United States. This makes the country's agricultural insurance covered a total of 73 million hectares of crops in 2013, or 45% of the total planting acreage. CIRC Head Xiang Junbo said the agricultural insurance scheme paid USD3.4bn in compensation and benefited 33.67 million rural households last year.
Deposit rate liberalisation eyed in two yearsMar 11, 2014
Central Bank Governor Zhou Xiaochuan told reporters at a media conference that China is likely to liberalise deposit rates within two years. Zhou, who heads the People's Bank of China, however, warned that deposit rates could increase as a result of the liberalisation. Zhou, who made the pronouncement at China's annual parliament session, expressed optimism that the liberalisation of deposit rates will be realised, at the most, in two years.
BlackRock names Helen Zhu China equities headMar 11, 2014
New York-based global investment management firm BlackRock Inc has announced the appointment of Helen Zhu as managing director and head of China equities. Zhu, who joins BlackRock from Goldman Sachs, will report to Andrew Swan, head of Asian equities, starting 7 April. She is set to assume management of portfolios later in the year, subject to regulatory approvals. Zhu was managing director and chief China equity strategist at Goldman Sachs. She also worked at ABN AMRO in a similar role.
Agricultural Bank of China applies for British licenseMar 11, 2014
Officials of the Agricultural Bank of China said the bank has applied for a branch banking license in Great Britain as it continues its global expansion. AgBank's application came months after British Chancellor of the Exchequer George Osborne pledged in Beijing that his country would ease restrictions on the establishment of branches by Chinese banks in Britain. AgBank Executive Vice President Guo Youda said Europe is one of the vital markets of the bank's global strategy.
China begins preparations to set up regional bankMar 10, 2014
The Ministry of Finance said China has begun preparations to set up the Asian Infrastructure Investment Bank (AIIB), a regional bank that would have an initial paid-in capital of USD50bn, contributed by its members. The AIIB will mainly focus on infrastructure construction and other productive fields in Asia to promote regional connectivity and economic cooperation, said Finance Minister Lou Jiwei. The AIIB will also explore business opportunities outside the region if the conditions are right. The amount and proportion of capital contributed by each member will be decided through discussion.
Alibaba set to put up China’s first internet bankMar 7, 2014
Hangzhou-based Alibaba Group could be the first-ever Chinese internet firm to create an internet bank. As many as five private companies in the country could acquire private-bank licenses to do the same. Alibaba might establish an Internet-based lender, one of the two private lenders in Zhejiang Province. The other private lender will be managed by over ten private firms from Wenzhou City.
Chaori Solar: No government bailout but we can only pay part of debtMar 7, 2014
Shanghai Chaori Solar Energy Science & Technology Co revealed that the local government is not offering them a bailout and that they can only repay a small portion of the interest on its debt that was issued about two years back. Shanghai Chaori could become China’s first bond default. Board Secretary Liu Tielong said that the Shanghai government did not make any assurances to help the company out and is handling its debt crisis following market regulations. The firm owes Rmb89.8m (USD14.6m) on its Rmb1bn (USD160m) product payable on 7 March.
Shanghai firm gets approval to buy bad loans from local banksMar 7, 2014
Shanghai State-owned Assets Operation Co, a city-owned investment company, has received approval from the Shanghai local government to buy non-performing loans from local banks. Instead of creating a new entity, the local government allowed the state-owned firm to purchase bad loans and other assets from local financial institutions. Experts said the move shows that Shanghai is bracing for an expected rise in bad debt. The company already owns equity in local banks including Bank of Shanghai, Shanghai Rural Commercial Bank and the brokerage Guotai Junan Securities.
China's shadow banking sector well under control says expertMar 7, 2014
The former Chairman of Industrial and Commercial Bank of China, Yang Kaisheng, said China's shadow banking offers no cause for alarm because the said sector is well under control. Yang said the total amount of China's shadow banking is not a big number compared with those in some developed countries. A member of the Chinese People's Political Consultative Conference, Yang said the country's shadow banking sector only accounted for about 10% of the GDP while the figure in the United States was 150%. He also added that the liquidity in China's banking sector remains healthy, based on several key indicators in the regulatory framework.
First China A-share ETF on New York Stock ExchangeMar 6, 2014
Launched on the New York Stock Exchange on 5 March is the first-ever China A-share exchange-traded fund (ETF). Global investors now have direct access to the A-shares markets of mainland China. CEO Jonathan Krane of Krane Funds Advisors LLC, a firm that provides China-focused ETFs, said that the ETF will give exposure to medium-sized and larger Chinese firms.
China goes for financial revamp including bank-deposit insuranceMar 6, 2014
Top Chinese leaders vowed to instigate policies that involve more risks into the country’s financial structure that has become too familiar to bailouts and other types of support from the government. Analysts see this as Beijing’s way of overhauling the economy without hurting it too much. One of the chief proposals is to include insurance in bank deposits to allow local government units to issue bonds while letting the renminbi rise and fall more in trading.
China’s president encourages Shanghai government to take chances in FTZMar 6, 2014
China President Xi Jinping prodded the government of Shanghai to be more confident in handling the Shanghai free trade zone (FTZ). The FTZ was after all established to enhance the country’s market-oriented reforms while looking for more appropriate systems that can be replicated by the rest of the country. Xi made his statement during a panel discussion with the Shanghai delegation to the ongoing annual session of the National People's Congress.
China set to deliver highest equity return this yearMar 6, 2014
A survey conducted by American professional services firm Towers Watson showed that global fund managers expect China to deliver the highest equity markets return this year at 8.4%. Although the expected figure is lower than the expectations of 10% in 2013, China is set to lead equity markets return this year, the survey said. The fund managers also expect the Eurozone to deliver returns of 8.1%, 7.3% in Japan, 7.0% in the United Kingdom, 6.9% in the United States and 6.4% in Australia. The survey also showed that almost half of the world's fund managers are expecting their institutional clients to be more aggressive this year. The survey covers 128 global fund managers, with the majority having institutional assets under management (AUM) above USD5bn and retail AUM above USD1bn.
World Bank's IFC issues Rmb1bn bond in LondonMar 5, 2014
The International Finance Corp (IFC), a member of the World Bank Group, said it has issued RMB-denominated bond worth Rmb1bn (USD162m) in London last Tuesday, a move that shows support for the internationalization of the Chinese currency. In a press release, the US-headquartered IFC said the issuance attracted investors from around the world for an order book of Rmb3.5bn. IFC Vice President and Treasurer Jingdong Hua said the RMB bond sent a strong signal of confidence at a time of global uncertainty and showed IFC's commitment to supporting the development of China's capital markets.
Shanghai Chaori Solar may be involved in Chinas' first corporate-bond defaultMar 5, 2014
Shanghai Chaori Solar Energy Science & Technology Co admitted it will not be capable of repaying its investors all the interest due to them on a bond on 7 March, in what could be the very first default in the country’s USD1.5tr publicly-traded corporate-bond market. Shanghai Chaori, which produces solar cells and panels, made the announcement that it doesn’t have enough funds to reimburse some Rmb89.8m (USD14.6m) interest on a Rmb1bn (USD160m) bond that was issued in 2012.
CIC posts 8% overseas investment returnsMar 5, 2014
China Investment Corp (CIC), the country's sovereign wealth fund, reported overseas investment returns of more than 8% in 2013, a more than 2% drop from what it recorded in 2012. CIC Executive Vice President Liang Xiang said that CIC managed to achieve the result by adjusting its strategy amidst great volatility in the financial market last year. Liang was among those who attended the National People's Congress. CIC, established in 2007, invests part of China's foreign-exchange reserves abroad.
Total QFII quota hits USD52.3bn in FebruaryMar 4, 2014
China's State Administration of Foreign Exchange (SAFE) said the country boosted foreign institutional investor quota by USD3bn in February, raising the total quotas issued under the Qualified Foreign Institutional Investor (QFII) programme to USD52.3bn. An additional Rmb12.6bn (USD2.06bn) quota was issued in February under the Renminbi QFII programme while a sum of USD900m was issued under the dollar-denominated QFII programme, SAFE said. Fidelity and Goldman Sachs Asset Management each received an additional USD100m in QFII quotas last month, raising their quotas to USD400m and USD600m, respectively.
PBOC chief says yuan movement normalMar 4, 2014
Central Bank Governor Zhou Xiaochuan said the recent fluctuations in China's yuan exchange rate are normal and should not be a cause for alarm. Zhou, who heads the People's Bank of China (PBOC), made the pronouncement as the recent fall in the yuan's value has prompted heated debate about its causes, with some speculating the slide may be engineered by authorities. Yi Gang, the vice head of the Central Bank, supported Zhou's statement, a Reuters report said. Zhou also said that despite the clamor by Chinese banks against internet financial products, the PBOC will not ban the said products but will only step up supervision over them. Without giving other details other than repeating the official tone, Zhou said authorities will offer clarifications in a coming press conference.
China to open online insurance sectorMar 4, 2014
China will gradually open up the online insurance sector and issue more licenses to market participants, a member of China's top political advisory body said. China is entering the e-commerce era with an increased level of online consumption; and online insurance will be a new growth sector, said Li Kemu who is both a member of the National Committee of the Chinese People's Political Consultative Conference and a former vice chairman of the China Insurance Regulatory Commission (CIRC).
Weaker RMB may force cut down on copper, oil importationMar 4, 2014
Investors believe that the declining yuan will compel China-based manufacturers to cut down on the amount of copper, oil and other types of raw materials they will have to acquire from abroad. These firms will find it necessary to convert the Renminbi into United States dollars to be able to purchase commodities from overseas. A diminished yuan will decrease these companies’ buying power. Copper prices for one have fallen 2.1% since the last week of February.
More foreign investors favor ChiNextMar 4, 2014
More overseas investors now prefer the ChiNext board, even though about 50% of them believe the growth could be nothing but a bubble ready to burst. According to a report that UBS Securities released on 3 March, the investors were attracted to the ChiNext board due to its strong market performance and substantial liquidity. Another 50% of the investors think a serious market bubble exists but that it will not burst anytime soon.
USD4.87bn in lock-up shares available for tradingMar 3, 2014
Lock-up shares worth about Rmb29.8bn (USD4.87bn) will soon be eligible for trading in the first week of March in mainland China. From 24-28 February the trading volume was at only Rmb20.2bn (USD3.28bn), according to data from the Shanghai and Shenzhen stock exchanges. All in all, 22 listed firms on the two stock exchanges will find their lock-up shares released to the capital markets from March 3-7.