China’s reform on individual income tax will increase consumer spending by 717.6 billion yuan (US$107.2 billion), according to a recent report. Middle-to-low-income groups, in particular, benefit from the reform. Urban residents with monthly income below 10,000 yuan enjoying tax cuts of more than 60%.
The Chinese online gaming sector is seeing some signs od rebound after the regulators started to issue licenses for new games. DouYu International Holdings Limited, a game-centric live streaming platform in China, filed for an initial public offering (IPO) on the New York Stock Exchange this week. With an expectation to raise up to US$500 million, this offering will be mainly used to invest in content, for research and development, for marketing to promote the brand and for general corporate purposes, which may include acquisitions.
China will intensively crack down on the illegal fundraising cases from April to June, according to the China Banking and Insurance Regulatory Commission (CBIRC). Regulators will also roll out rules on dealing with the illegal fundraising cases within the first half of this year.
The Monetary Authority of Macao is researching the possibility of using renminbi for quoting prices and settling accounts, according to Chinese media. This move will support the renminbi internationalization and energize the financial market of Macau.
An incubator for cultivating talents in cross-border e-commerce was launched this week in the Liaoning free trade zone (FTZ), the only FTZ in Northeast China. Being the home to more than 600 “hatching studios” and multiple training classrooms, conference halls and company service centres, the hub will invite experts in foreign trade and professional cross-border e-commerce companies to train start-ups regarding international trade and cross-border e-commerce issues.
Taiwan enterprises are supported to be listed in mainland China, according to the Taiwan Affairs Office of the State Council of China. The regulator says that there is no regulatory obstacles for Taiwan enterprises to apply for listing on the new high science and technology trading platform (科创板). So far there are more than 30 Taiwan enterprises already listed on Chinese A-share market.
In March this year, 40 listed real estate enterprises in China have raised a total of 102.42 billion yuan, hitting a record high since November 2017. Debt financing is the major financing tool for these enterprises, taking 96.19% of the total funds raised in March.
People's Bank of China has rolled out a more convenient mechanism for retail investors to buy Chinese treasury bonds. Retail investors can buy these bonds through online channels and branches of the underwriters during the whole month of April. The treasury bonds used to be open to retail investors only for 10 days in April.
Chinese has relaxed the restrictions of the household registration, or the hukou system. Cities in the Greater Bay Area (GBA) including Zhuhai, Huizhou, Jiangmen and Zhaoqing will remove the restrictions of immigrants applying for registrating the hukou under these cities. Guangzhou, Shenzhen, Foshan and Dongguang will improve the points-based household registration system. As the household registration system is closely related to purchasing houses, the moves of the regulators will boost the real estate market in the region.
The regulations on refinancing will be revised and relaxed. The ceiling of refinancing equity issuance will be relaxed to 50% from the previous 20% of a company's total shares.
In order to solve the difficulties of smaller enterprises in raising fund, Chinese regulators will roll out supportive rules for such enterprises. Smaller enterprises are encouraged to go public. The process of listing application can be simplified.
The civil aviation development fund will be reduced by about 50%, according to Chinese Premier Li Keqiang. This move will significantly reduce the cost of aviation companies and energize the performance of the stocks in this sector, according to Chinese analysts.
In order to further control the risk of the online lending industry, Chinese regulators have agreed to tighten the supervision on this sector this year. Key focuses include monitoring data and information disclosure. The regulators will crack down on the illegal lending platforms.
The Shanghai Stock Exchange (SSE) has recently announced that it had accepted 37 companies’ applications to be listed on China’s new high science and technology trading platform (科创板). The companies have to go through the second stage of audit and inquiry before they can successfully be listed on the board. The board was launched to boost the development of high-tech sectors and advance economic transition leveraging financial reforms.
Chinese regulators are revising the rules on reinsurance, according to a source talking to 21jingji.com. The move aims to provide a more relaxed policy environment for the industry regarding requirements on under-weighting and lock-in.
China will issue the first batch of public REITs soon. Beijing, Shanghai, Guangzhou, Shenzhen and Hainan are on the list of pilot cities for these private REITs.
Foreign institutional investors have paced up to enter the Chinese bond market since 2019, according to the China Foreign Exchange Trade System (CFETS). Products offered by global asset managers such as BlackRock and Vanguard Group have appeared in the Chinese market. The number of new accounts opened during the first quarter of this year by foreign institutional investors is close to 300, accounting for 70% of the total number of new accounts opened in 2018.
China should consider rolling out credit default swap (CDS) products in the future, according to Xie Zhong, chairman of Shanghai Clearing House. China's market has already shown great potential in the rate derivatives and forex derivatives, according to Xie. In order to mitigate the risk in the credit market, more sophisticated financial tools including CDS should be rolled out, Xie says.
The foreign debt of China continued to grow in 2018, according to the State Administration of Foreign Exchange (SAFE), noting that the overall growth rate slowed down. The foreign debt risk was generally controllable.
China will further open up the financial market, according to Chinese Premier Li Keqiang, noting that the regulators will once again roll out a revised negative list for foreign investment in June. Sectors such as telecommunication, healthcare, education, transportation, infrastructure, and energy will be further opened up to foreign investment.
The number of gaming companies IPO applying for IPO in March has declined to six from the ten of same time last year. This is due to the tightened regulation on the industry, according to Chinese analysts.
Shanghai government has issued 25 new rules to support innovation and vitalize the tech sector. The recent official launch of new high tech trade platform (科创板) has offered the opportunity, according to Shanghai officials, noting that the city aims to take the chance, building its innovation capability and connecting to the global innovation network.
China will continue to control the risk of the financial market, with a focus on stock pledge risk and bond default risk, according to the China Banking and Insurance Regulatory Commission (CBIRC). Meanwhile, the regulator will improve the fundraising environment and support direct finance.
The Shanghai Stock Exchange began accepting IPO applications for the new high tech trade platform (科创板) yesterday. The bourse disclosed the progress of reviewing these applications on its official website. The market might see the first group of offerings in June, according to analysts.
China has reduced 1.3 trillion yuan (US$193.6 billion) of taxation in 2018. This year, the country's regulators will further strengthen their efforts in this to vitalize the economy. As the burden of Chinese enterprises will be further reduced, the market is expected to see more innovation coming up, according to the regulators.
Last year, there were 10,531 complaints about online insurance companies in China, according to China Banking and Insurance Regulatory Commission (CBIRC). The number records 121.01% growth on year. The number of complaints about non-life insurance companies increased by 128.25% y-o-y in 2018, reaching 8,484, according to the regulator.
The stock value of Kweichow Moutai, a Chinese liquor (白酒) brand has hit a new record high today. Its stock price increased by 4.22% today, with the market value of the company exceeding 10.176 trillion yuan (US$1.52 trillion).
The investment from Hong Kong and Macau accounts for 70% of the total foreign investment into mainland China, according to Chinese Premier Li Keqiang, highlighting that the country has been attaching great importance to the sector. Investors from Hong Kong and Macau can refer to the newly enacted foreign investment law, says Li, noting that a more complete and unified policy environment will attract more investment from the two markets.
China’s national legislature today passed the foreign investment law at the closing meeting of its annual session. With a more complete regulation on the entry, promotion, protection and management of foreign investment, the law aims to improve the transparency of foreign investment policies. This new fundamental law ensures domestic and foreign enterprises are subject to a unified set of rules.
Hong Kong government will set up an office with more than 30 staff to manage projects relating to the Greater Bay Area.
The growth of bond issuance in China has paced up this year. A number of Chinese central state-owned enterprises (SOEs) have recently submitted their plans of raising funds through bonds. In March, more than five SOEs has announced their plans of bond issuance, ranging from 10 billion yuan (US$1.49 billion) to 30 billion yuan.
The financial tools serving small-to-micro enterprises will be improved, according to a new notice by China Banking and Insurance Regulatory Commission (CBIRC). The loans issued to these enterprises should maintain a rational growth in 2019, the notice requires. Major banks in China should lead and contribute to the growth.
China has cut 200 billion yuan (US$29.8 billion) of tax from October last year and January this year. The first nine months of last year have seen an increase of 20% y-o-y in the taxation and in October, the country launched the taxation reform last year. The taxation in January 2019 was reduced by 23.5% on year.
China will further crack down on the non-performing loans (NPLs) in 2019, according to the China Banking and Insurance Regulatory Commission (CBIRC).
Chinese regulator will further tighten the supervision on the financial system to prevent the risks. Four areas, namely non-performing loans, liquidity risk of small-to-medium-size banks, shadow banking and real estate loan, will be the key focuses of the regulators.
China will enact new laws on property taxation in 2019, according to the country's top officials.
Chinese regulators say that insurance companies are encouraged to do long term investment in the capital market. Financial institutions are supported to diversify and expand the capital inflow. In addition, China will support the development of venture capital (VC) as part of the efforts to boost innovation, according to Chinese Premier Li Keqiang. The trend of venture capital and private equity (PE) firms powering China’s innovation will be intensified in the years ahead, Chinese analysts predict.
Chinese officials of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) suggest that more reforms should be rolled out to support the private enterprises. Compared with State-owned enterprises, private enterprises have seen more difficulties partly due to insufficient credit support. These companies should be given tangible benefits in terms of steady development and fair competition.
Bank of China (BOC) Malaysia Branch launched its Wealth Management Banking Center this week. Being the first among BOC's Southeast Asian entities to do so, the service is geared towards high net-worth individual customers through personalized wealth management advice. The bank is also redefining the digital agenda to enhance customers experience in the region.
AlipayHK users will soon be able to use the mobile payment app in mainland Chinese cities in the Greater Bay Area (GBA). So far, the mainland Chinese version of Alipay can be used in Hong Kong while the Hong Kong version is only applicable to the local market. In the long run, AlipayHK's users will be able to pay in most of the cities in mainland China, the company says.
China will do more to attract foreign investment in 2019, according to a government work report released today. The country will further relax controls over market access, simplify the negative list for foreign investment, and permit wholly foreign-funded enterprises to operate in more sectors, according to the report. Foreign investors' legitimate rights and interests will be further protected, the report says.
China will reduce the tax burdens and social insurance contributions of enterprises by about 2 trillion yuan (US$298 billion) this year, according to a government work report issued today. Regulators will mainly focus on reducing tax burdens on the manufacturing sector and small and micro business, according to the report.
China will improve the law system serving to the opening up of the financial market, according to Chinese officials. In addition to the regulations on foreign investment, laws relating to securities and resource tax will be revised or enacted this year.
Pan Gongsheng, administrator of the State Administration of Foreign Exchange (SAFE) and deputy governor of the People's Bank of China (PBoC) will come to Hong Kong this month to discuss with local regulators on implementing the newly issued Greater Bay Area Plan.
In order to promote the development and application of AI, Chinese officials are discussing to improve the relevant regulations on this industry. Major topics include data security and personal information protection.
Shanghai Stock Exchange has opened a centre in Guangzhou today. The centre will serve the Greater Bay Area, providing convenience to the capital market in Guangdong, Fujian and Hainan. Services relating to the new high tech trade platform (科创板) will be a major focus of this centre.
In order to attract more long term investment, the China Securities Regulatory Commission (CSRC) is considering to crack down on the illegal practice in the capital market. The cost of violating regulations and rules will be raised, according to the regulator. The investor education will be introduced to the general public, promoting rational investment and long term investment.
China issued a total of US$31.2 billion (208.63 billion yuan) green bonds last year, according to a report issued by China Central Depository & Clearing and Climate Bonds Initiative. With a 33% of year-on-year growth in issuance in 2018, the country continues to be the world’s second-largest green bond market. Industrial Bank of China takes up 23% of last year’s total issuance, becoming the largest issuer in China and the second largest worldwide.
Chinese regulators are supporting qualified private enterprises to issue bonds for fundraising in a bid to help them ease financing difficulties. In November and December last year, private companies issued a total of 155 billion yuan of bonds up 70% y-o-y, according to a report from the People’s Bank of China.
Guangdong province’s high import and export volume has been attributed in part to the restructuring and upgrading of foreign trade companies and innovation in science and technology. With the release of the development plan for the Guangdong-Hong Kong-Macao Greater Bay Area and the development of the Belt and Road Initiative, Guangdong’s foreign trade will maintain its strong growth momentum throughout the year, say Chinese experts.
China’s shared office market, or co-working space market, will see more mergers and acquisitions this year and the next as more resources and capital flow into top operators, according to a recent report by the China Real Estate Chamber of Commerce. Last year, 40 co-working space brands exited the market, with about 3% of them being acquired. The top 10 companies take up 37% of the total area of co-working space in China, compared to 75% for the top 100 companies, showing a trend of market centralization.
Chinese regulators took control of Anbang in February last year, part of a sweeping campaign to reduce financial risk. This was supposed to be ended in February this year, but the regulators have decided to prolong it to February next year.
The China Banking Association (CBA) and the Securities Association of China (SAC) have planned to lower the costs of their member institutions, with the CBA expecting to reduce membership fees by 14.5 million yuan (US$2.1 million) in 2019. This move is to boost members’ roles in serving the real economy which is now one of the major national strategic plans of China.
Chinese regulators will reduce the taxes and fees in the capital market to relieve enterprises' burden and vitalize the market. The Securities Association of China (SAC) has issued a relevant notice recently.
The property industry in the Greater Bay Area (GBA) will benefit from the GBA Outline Development Plan issued this week, according to Chinese analysts. Residence, office buildings and industrial logistics properties are expected to grow.
Regulators from mainland China and Hong Kong is discussing to launch a cross-border investing mechanism. Under the newly issued overarching plan of the Greater Bay Area (GBA) Hong Kong, which has been a bridge connecting mainland China to the world, will be transformed into an active participant, according to Hong Kong regulator, noting that interested parties need to move fast and seize the opportunity. In the meantime, Guangdong is considering expanding the free trade zone (FTZ) in the province.
China is planning to form a batch of pilot zones to promote the AI technology. Beijing has already launched one. The zone will focus on exploring an innovative system to develop the AI technology through coordinating efforts of the government, academia and the industry, aiming to develop Beijing into a major producer of AI-related theories, ideas and talent.
The economic slowdown in China has seen the headcount reduction in quite a few companies. Chinese e-commerce giant JD.com has recently announced that it will reduce the number of senior executives by 10% in 2019. These will include the nearly 100 executives with positions higher than vice presidents, meaning that about 10 senior executives might lose their jobs this year.
According to the outline of the development blueprint for the Greater Bay Area (GBA) released yesterday evening, the main focus of the initiative is to strengthen the cooperation among the three areas in order to turn the GBA into a world-class innovation and technology hub and an efficient gateway between the mainland and the outside world, particularly the economies involved in the Belt and Road Initiative.
Net capital inflow into China’s A-share market through stock connects hit a record high in January with a total net inflow of 60.69 billion yuan (US$8.97 billion) through the northbound trading of the Stock Connect. This marks the first time that the monthly net inflow exceeds 60 billion yuan since the Stock Connect's launch in 2014.
Chinese regulators are considering to integrate the financial assets of certain central state-owned enterprises (SOEs) through transfers and sales. The State-owned Assets Supervision and Administration Commission (SASAC) will soon roll out regulations regarding this. The People's Bank of China (PBoC) and interested parties are discussing to issue a special regulation to supervise the financial holding arms of central SOEs.
The overarching framework of the Greater Bay Area (GBA) will be issued this evening, according to sources talking to Hong Kong media.
China Banking and Insurance Regulatory Commission (CBIRC) has announced that Wu Jianfei （吴剑飞）, a veteran fund manager, is approved to be the general manager of Anbang Asset Management. Wu used to be a general manager at Minsheng Royal Fund Management.
Over 90% of the tendered bridge and tunnel projects of the China-Laos railway will be completed by the end of 2019, says the Laos-China Railway Co., Ltd. (LCRC), noting that the construction of the key projects under the Belt and Road Initiative (BRI) is entering the critical phase in 2019.
Didi Chuxing Technology, a Chinese ride-sharing, artificial intelligence and autonomous technology conglomerate, was reported to have a total loss of 10.9 billion yuan (US$1.61 billion) during the past financial year, up 336% y-o-y. This number was 2.5 billion yuan in the previous year. The loss in 2018 is related to the two murders by Didi drivers. In addition, the company spent 11.3 billion yuan on the drivers' allowance during the 2018 financial year.
China has been rolling out measures of reducing taxation to boost consumption. Companies in the postal service and logistics industry are expected to see tax reduction soon.
The G60 High-Tech Corridor, an alliance that promotes the integration among nine cities in the Yangtze River Delta including Shanghai and Hangzhou, will sign a cooperation agreement with the Shanghai Stock Exchange (SSE) this Friday. The G60 High-Tech Corridor Index will be launched then. The index will include 161 stocks, accounting for a total valuation of 1.5 trillion yuan (US$222 billion).
Shenzhen has launched the construction of 31 Greater Bay Area (GBA) projects which account for a total investment of 74.8 billion yuan (US$11.1 billion). Major projects include new transport infrastructure and forming a new city centre in Qianhai, a pilot free trade zone in Shenzhen.
Chongqing has been improving its regulatory environment and simplifying the procedures of setting up a business or a project. Therefore, a total of 12,768 enterprises were set up in the pilot free trade zone (FTZ) of Chongqing in 2018. The total registered capital of the newly established enterprises surpassed 128 billion yuan (US$18.89 billion).
The growth of consumption in China might slow down this year, according to the Ministry of Commerce, noting that more measures will be rolled out to boost consumption.
China’s information consumption saw a rapid increase last year, with the total business volume of the telecommunication sector rose by 137.9% y-o-y, according to the Ministry of Industry and Information Technology (MIIT). The services of 4G continued to develop last year, with the number of users hitting 1.17 billion. The price of a number of Chinese stocks relating to the 5G industry rose its daily limits this morning.
Chinese regulators plan to upgrade state-owned investment companies, particularly in terms of the management model, distribution of industries, and structural reforms. There are 122 Chinese state-owned enterprises with reforms underway, and so far, 11 of them are state-owned investment companies.
UnionPay provides support to the payment and settlement of some of the online red packets this year. UnionPay cleared 261.7 billion yuan (US$38.8 billion) of payment and settlement on Chinese New year Eve (February 4), recording a growth of 81.3% on year.
The cross-border e-commerce pilot zone in Guangdong launched a new import business model this month. Under this business model, e-commerce platforms can purchase a large number of goods from overseas according to market forecasts and consumer demands, and these bonded goods are allowed to be imported and stored in certain areas in the pilot zone before delivered to consumers individually. With the new business model, the pilot zone which is located in Zhuhai might energize the cross-border e-commerce business among the Greater Bay Area cities including Hong Kong and Macau.
Qualified Foreign Institutional Investors (QFII) and RMB Qualified Foreign Institutional Investors (RQFII) are allowed to invest in the stock listed on China's National Equities Exchange and Quotations (NEEQ), also known as the “new third board”, according to a recent announcement by China Securities Regulatory Commission (CSRC). NEEQ will soon roll out relevant regulations. This move will enhance the corporate governance of the companies listed on the NEEQ.
Local governments in China have lowered the GDP growth targets for 2019 amid the economic downturn. This will be good for the country's economic restructuring and high-quality development. Last year, Guangdong led the country's economic growth with a 6.8% GDP growth.
Bloomberg has confirmed today that Chinese renminbi government bonds will be added to the US$54 trillion Bloomberg Barclays Global Aggregate index from April this year. This shows that foreign investors are increasingly more interested in Chinese market, accoring to the PBoC. The regulators also says that the bond market will be further opened up with discussion on new regulations underway.
The draft rules of the new high tech trade platform (科创板) for companies from the innovative technology sector has recently been rolled out. Qualified unprofitable companies and companies with special structure are allowed to list on the new board. The investment threshold for individual investors is set at 500,000 yuan (US$74,507).
The China Council for the Promotion of International Trade (CCPIT), China's foreign trade and investment promotion agency, will work with interested parties to build a new regulatory mechanism to ensure the interests and legitimate rights of domestic companies in overseas markets. The mechanism will establish databases of credit records for state-owned enterprises and a number of private companies, improving information sharing and preventing potential risks.
People's Bank of China (PBoC) will issue central bank bills next month in Hong Kong, according to a source talking to Chinese media. The PBoC has recently announced that it will set up a central bank bills swap (CBS) to encourage Chinese banks to improve the liquidity through perpetual bond issuance.
Chinese regulator will implement a certain amount of subsidy to energy-saving smart home appliances. The National Development and Reform Commission (NDRC) sees smart home appliance sector to attract a total consumption of 700 billion yuan (US$59.41 billion) over the next three years.
Guangdong Province will accelerate a special plan to develop the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), providing policy support for the 11 cities involved. The three parties will jointly build an international science and technology innovation centre, a science and technology innovative corridor, and a group of collaborative laboratories to conduct research and development of advanced technologies. Guangdong recorded a GDP growth of 6.8% in 2018.
Most of the Chinese local governments have lowered the fiscal revenue target for 2019. However, Hainan Province sets its GDP growth target for this year at 7% to 7.5% as the free trade zone (FTZ) continues to expand there. The Province recorded 5.8% of GDP growth last year, falling short of the 7% target.
Tesla's factory in Shanghai has completed the registration and is seeking syndicated loans, according to a source talking to Caixin. A number of domestic banks are reaching out to Tesla, says the source.
The Hong Kong regulator has been encouraging the development of virtual banks to promote fintech. Hong Kong Monetary Authority (HKMA) will issue the first batch of virtual bank licenses in the first quarter of this year. The HKMA has received applications from more than 30 institutions as of end August 2018. Tencent, Ant Financial, JD.com, Xiaomi, and Standard Chartered Bank are among the list.
The supply-side structural reform will continue to be a major policy in China. Through deleveraging and eliminating excess capacity, the country aims to improve the quality of economic growth, economists say.
The draft rules of the new high tech trade platform (科创板) for companies from the innovative technology sector has not been rolled out yet, and the board is expected to see the first batch of listings during the first half of this year. It is estimated that there will be 150 companies listing on the new board by the end of this year, raising a total of 50 billion yuan to 100 billion yuan (US$7.37 billion to US$14.74 billion).
Amid the Sino-US trade tension, China recently expresses its attitude towards investing in the US. China will not significantly cut back the investment in US treasury bonds, says the vice chairman of the China Securities Regulatory Commission (CSRC).
Major Chinese local governments such as Beijing, Jiangsu, Sichuan, Henan, Hebei and Fujian have lowered the fiscal revenue for 2019 due to the economic downturn and the pressure outside the country. In order to maintain a stable economic growth, the regulators will continue to roll out further measures to reduce the taxation.
Amid the economic downturn and the Sino-US trade tension, some of the large corporates in China including the Internet enterprises are cutting jobs, according to Chinese media. However, China's National Development and Reform Commission (NDRC) says today that the recruitment and headcount of most Chinese enterprises especially the Internet companies are reasonable, and the regulator has not observed large scale of job-cuts.
Official data shows that 189 fixed-asset investment projects were approved in China in 2018. The projects are mostly in high-tech, energy, transportation and water conservancy sectors. China’s fixed-asset investment grew 5.9% y-o-y in 2018, reaching 63.56 trillion yuan (US$9.38 trillion) last year.
China’s Jiangxi Province has recently launched 15 regular air routes connecting the province with countries and regions along the Belt and Road Initiatives (BRI). The exports of Jiangxi province to major countries along the BRI reached US$12.16 billion in 2018, up 17.5% y-o-y. Flights now link the province with Moscow and Singapore. New cargo flights linking the province with Belgium are also launched.
The supervision on auto insurance industry will be tightened, according to a new notice issued by China Banking and Insurance Regulatory Commission (CBIRC) recently. Insurers are banned from changing the policies and rates without approvals from regulators. Insurers are also required to enhance the quality of information disclosure.
China on Thursday urged the US to stop interfering in China's internal affairs and damaging China's interests, according to Foreign Ministry spokesperson Hua Chunying. Hua says that the US has been making accusations against China on issues including debts, trade, the South China Sea, international rules and religious freedom. China also calls for the US to stop suppressing Chinese telecom companiesthe and to do more things that are conducive to mutual trust and cooperation.
Shenzhen Stock Exchange will further promote the reform in the supply-front in 2019. The bourse encourages new economy companies with new business models to list on the exchange, and calls for further collaboration between private-owned and state-owned enterprises.
Chinese regulators have approved a number of convertible bonds recently and Chinese analysts say the market can expect more issuance this year. There are 246 billion yuan (US$36 billion) of such bonds waiting for approvals so far, according to financial data provider Wind.
Chinese regulators will further enhance the connectivity of bond markets and promote the bond ETF products. China's State Administration of Foreign Exchange is also improving the rules regarding foreign investors participating in the foreign exchange hedging market. Minister of Finance is also seeking to roll out favourable regulations on Chinese treasury bonds.
China is setting up a national-level cyber-security industrial park to develop the industry and enhance the ability of the Chinese tech companies. Over 10 companies specialized in internet security have signed up for this project. The production of this industrial park is expected to exceed 100 billion yuan (US$14.5 billion) by 2020.
Chinese tech giant Tencent's mobile game, Honor of Kings, is reported to make about 13 billion yuan (US$1.92 billion) in 2018, ranking the first globally. Launched in 2015, the game is a multiplayer battle arena based on mobile phones. Although the Chinese regulators have been tightening the regulation on the gaming industry, it is still considered as one of the most promising sector this year.
China’s life insurance sector will see its premium growth rebound in 2019 and 2020, with an annual growth of over 10%, according to experts talking to China Securities Journal. This will be a result of relatively steady economic growth and a weakening effect of the tightened regulatory policy for investment-linked insurance products. The life insurance premium dropped by 4.75% y-o-y during in the first 11 months of 2018.
The new issuance of renminbi loan in 2018 reached 16.17 trillion yuan (US$2.39 trillion), recording a growth of 300% (2.64 trillion) y-o-y. The regulator predicts that the economic environment can be more complex in 2019, noting that interested parties should contribute to stabilizing the market and reducing possible risks.
The payment industry in China is set to reform with new payment methods such as face recognition payment booming in the country, according to a recent report. The major banks in China have rolled out face recognition related business in the recent two years, and third-party payment platforms, such as Alipay, are also active in this area. But issues such as possible risks in managing the biological information remain unsolved, says the report.
State Administration of Foreign Exchange announced today that the total quota of the Qualified Foreign Institutional Investors (QFII) program had been doubled, reaching US$300 billion. This move aims to meet the demand of overseas investors trying to expand their investment in the Chinese capital market.
More measures are expected to roll out to optimize the management of state-owned enterprises (SOEs) assets in China. These measures would include further plans regarding the mixed-ownership reform, new operational mechanisms for the SOEs, and a more relaxed regulatory environment, says a research arm of China's State Council. These measures aim to boost economic growth amid external challenges, according to the research arm.
About 1,300 companies traded on the two stock exchanges in China had released their performance forecasts, and 65% of them have predicted positive profit growth in 2018, according to China Securities Journal, noting that 137 companies predicted their net profits to at least double. Computer, communication and electronic equipment manufacturing is expected to have the largest number of companies with growth in profits.
Chinese tech giants have been showing interests in Artificial Intelligence of Things (AIoT), a technology that integrates AI and the internet of things (IoT). Xiaomi has announced that it will invest 10 billion yuan (US$1.48 billion) in AIoT in the next five years. As of November 2018, the IoT network of Xiaomi has incorporated 132 million devices ranging from smartphones to laptops.
Shanghai Pudong New Area was estimated to have a total GDP of more than 1 trillion yuan (US$146.5 billion) in 2018. The Area's GDP has grown from 6 billion yuan in 1990 when China first started to develop and open up Pudong. Last year, Pudong’s total fixed-asset investment is estimated to hit 200 billion yuan, with foreign trade volume exceeding 2 trillion yuan.
China's economy is expected to stabilize after the first quarter of 2019, says Sheng Songcheng, a counsellor of the People's Bank of China (PBoC), noting that the country's economy might recover in the second half of this year. Sheng also predicts that the US-China trade tension will be mitigated a bit in the short term.
Shenzhen authority will improve the multi-level capital market system, according to a recent announcement. The city will roll out regulations to encourage the capital market activities of startups and innovative enterprises, such as listing and M&A, to support the fundraising or the delisting of these companies. The city will also issue rules on setting up private equity secondary market funds.
Chinese asset management industry has been reforming after the new regulation issued last year. The rate of return of many wealth management products sold by Chinese commercial banks has been declining, aiming to direct the customers to the newly rolled out products from the existing ones which will be officially banned after the transitional period of the new regulation. One of the major challenges for asset managers this year is to find a balance between the new products and the existing ones.
Early in November last year, Chinese regulator announced that a new board for companies from the innovative technology sector (科创板) will be launched in the two stock exchanges of China soon.Though it is still under discussion, the new board might include five different listing standards to cater to different companies. The investment threshold for individual investors is set at 500,000 yuan. In addition, investors are required to provide at least six months of experience investing in the A-share market.
Guangdong province says it will deepen the reform and opening-up in the economic development. The province calls for further cooperation with Hong Kong and Macao to enhance the international competitiveness of the Greater Bay Area. The cooperation will focus on scientific and technological innovation.
The regulators will continue to focus on controlling the possible risks in the financial system in 2019. New regulations on financial holding companies will roll out this year and detailed rules relating to the new regulations on the asset management industry will also be implemented this year.
China’s securities regulator approved 102 initial public offerings (IPOs) applications last year, down from 401 in 2017, recording a drop of 74% y-o-y. Five out of the 10 biggest IPOs last year came from China. The market predicts that the regulator will be more strict next year on giving approvals to IPO applications.
Hangzhou, China’s e-commerce hub plans to build a credit evaluation mechanism in two years to regulate the e-commerce industry. The mechanism, based on a shared credit database, will help the regulator to crack down on illegal practices such as trading fake and shoddy products and pyramid schemes. This echoes with the tightened e-commerce law implemented by Chinese regulators recently.
Chinese Premier Li Keqiang calls for regulators to use macro-control vehicles to recover the market. The People's Bank of China is considering to lower the deposit reserve ratio and support the fundraising of private enterprises. The Chinese stock market, especially the banking sector, showed signs of recovery after the announcement.
Shanghai has revealed its target of becoming a global scientific innovation centre last year with detailed plans recently announced. The city plans to form the basic framework by 2020 so that it will be able to act as the centre for innovation by 2030. The city will focus on areas including the integrated circuit, AI and biopharmaceutical science.
China's State Administration of Foreign Exchange (SAFE) plans to implement pilot programs to simplify the practices in foreign exchange receipts and payments in the Greater Bay Area (GBA), Shanghai and Zhejiang. The reviewing process of receipts and payments documents will be simplified for qualified banking serving corporates with good credit ratings.
Chinese state-owned media under People's Bank of China predicts that the country's GDP growth in the fourth quarter of 2018 is not likely to surpass 6.5%. This is due to the country's economic downturn and the Sino-US trade tension. China's GDP growth in the third quarter stood at 6.5%, hitting the country lowest record since the 2008 financial crisis.
According to Chinese media, 324 Chinese enterprises went public in 2018, accounting for 24% of the global IPOs. More than half of these companies chose Hong Kong to go public. About 40% of the newly listed companies in China in 2018 come from the Greater Bay Area (GBA). So far, there are 6961 listed companies in China. Chinese regulators will remain strict on issuing IPO approvals in 2019, according to Chinese media.
Chinese gaming industry has been one of the hot topics among investors even though the regulators are tightening the supervision over this sector. Regulators have required the game operators to send their products for screening before they can get operation licenses. The first batch of licenses will be released soon, according to the regulator.
Shanghai free trade zone (FTZ) will include a new area of 315 square kilometres. The new area will focus on sectors including AI, new energy car, high-end smart devices, and the integrated circuit. In addition, the Ministry of Commerce calls for further opening up of the western parts of China. The area is encouraged to further participate in the Belt and Road Initiative.
The difference of valuation between A share and H share is being reduced with more H share listed companies go listing on A share. Recently, Qingdao Port got the approval from China Securities Regulatory Commission to list on A share. So far this year, there are eight Hong Kong-listed companies go listing on A share. This is the highest annual record since 2007.
Next year, local governments are expected to accelerate bond issuance to raise more funds for infrastructure construction projects, according to experts close to the Ministry of Finance. The new bond issuance of Chinese local governments during the first 11 months of 2018 reached 4.1 trillion yuan (594 billion yuan). In November alone, the issuance reached 45.9 billion yuan.
Guangdong authority is working on the regulation on promoting the Greater Bay Area (GBA). The regulation might include more favourable rules for Hong Kong and Macao residents working in the GBA. In addition, Guangdong Province will form an international centre of technology innovations and a cooperation platform for international economic cooperation.
Early in November, Chinese regulator announced that a new board on the innovative technology sector (科创板) will be launched soon and the registration system is being tested. Shenzhen Stock Exchange (SSE) says it has been promoting the innovation and reform in the listing system of China. The bourse calls for lowering the requirements of companies applying for listing on the new tech innovation board.
China and Cambodia vow to enhance cooperation under the Belt and Road Initiative. China and Thailand also pledge to deepen bilateral cooperation and advance the construction of the China-Thailand railway. China also vows to be Myanmar's reliable partner of cooperation, promoting high-level exchanges and strengthening cooperation on BRI. China and Vietnam pledge to manage maritime issues and create a good atmosphere for the development of bilateral relations.
The local institutions of the China Banking and Insurance Regulatory Commission (CBIRC) are officially launched today. CBIRC is formed early this year by merging the China Banking Regulatory Commission and China Insurance Regulatory Commission.
Chinese individual investors investing in Hong Kong funds through Mutual Recognition of Funds (MRF) between mainland China and Hong Kong continue to be free from individual income tax of price differences.
Ten Lifestyle Group wins a new contract with ICBC Private Banking Department, to provide travel and lifestyle concierge services to a select group of ICBC's high‐net‐worth clients based in China. Headquartered in the UK, Ten Lifestyle Group is a technology‐enabled lifestyle and travel platform for the global wealthy and mass affluent. The cooperation project is expected to launch in January 2019.
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.”