Sector report on China 23.08.2021

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Financial Authorities Declarations

  • Flash News !

– The Trust Industry expanded in 2021 Q2 as total assets stood at 20.64 Trillion Yuan up +1.28% quarter over quarter (data from the China Trustee Association). The Industry is under a relevant and strict supervision to made structural adjustments for better support Real Economy. Consequently, the balance of fund trusts invested in Real Estate sector down 16.94% yoy to 2.08 Trillion Yuan while those invested in industrial and commercial firms stand at 4.79 Trillion Yuan.

-In July, the commercial banks registered a net surplus in their Forex settlement amounting 63.2 Billion Yuan (about 9.73 Billion USD) according to the State Administration of Foreign Exchange (SAFE). Banks purchase stood at 1.39 Trillion Yuan while Sales reached 1.33. The net surplus over the Januar-July period stand at 939.2 Billion Yuan.

– Ansteel and Ben Gang Group Corporation, two steelmakers’ firms, announced a merger followed by a restructuration to create the third world largest steelmaker.The deal specifies that the current owner of Ben Gang, the Liaoning Province’s State-owned Assets Supervision and Administration Commission, will transfer 51% of stake to Ansteel.

– The Industrial Bank issued the first Carbon Sink Loan amounting 18 Million Yuan.  The Loan granted to the company managing the coastal wetland in Qingdao (Jiaozhou Bay) in the Shandong Province to purchase crops having better carbon uptake capacity to preserve the wetland.

  • The CSRC approved IPO !

The China Securities Regulatory Commission. (CSRC) approved IPO on the Shenzhen ChiNext market of Shandong Longhua New Material Co., Ltd., Sino-High (China) Co., Ltd., Kale Environment Technology (Shanghai) Co., Ltd., Shaoyang Victor Hydraulics Co., Ltd., Zhejiang SSAW Boutique Hotels Co., Ltd. and Fullink Technology Co., Ltd. In addition, the CSRC approved IPO on the Shanghai STAR market : CM Research (Shanghai), Inc.

  • The CSRC declarations a greater Capital market opening up !

The CSRC declared that the opening of Capital Market will be accelerated.

China will unswervingly advance institutional opening-up of the capital market […] The country will roll out a raft of policy measures to further open up its capital market while coordinating development and security”.

The Commission also stressed to improve the pricing mechanism for stock issuance and the quality of the prospectus disclosure while deepen the reform of the National Equities Exchange and Quotations.

In addition, the CSRC reaffirm and clarify its “zero-tolerance” monitoring of illegal activities like financial fraud, market manipulation and insider trading while promoting its risk control policy (Forestall, Monitor and Defuse risks).

The CSRC is focusing on three main objectives:

-Create a better environment to ease Cooperation with the US on audit supervision.

-Deepening and strengthening the relationship between Chinese mainland markets and Hong Kong.

-Support stable development of Hong Kong capital market

Concerning the cooperation with Hong Kong Authorities, the CSRC supports the Hong Kong Securities and Futures Commission (SFC) decision to create a A Share Index futures contract.

The move is conducive to enriching the risk management tools for overseas investors when participating in the A shares market and facilitating the further growth of long-term capital flows into the A shares market […] It also helps to consolidate and maintain Hong Kong’s status of being an international financial center”, as said in an CSRC statement.

Central Bank Operations and declarations

Date Operations Maturity Amount Interest rate
August 16 Reverse Repo 7-days 10 Billion Yuan 2.2%
  MLF 1-year 600 Billion Yuan 2.95%
August 17 Reverse Repo 7-days 10 Billion Yuan 2.2%
August 18 Reverse Repo 7-days 10 Billion Yuan 2.2%
August 19 Reverse Repo 7-days 10 Billion Yuan 2.2%
August 20 Reverse Repo 7-days 10 Billion Yuan 2.2%

The People’s Bank of China (PBOC) issued 25 Billion Yuan of Central Banks bills Swap (CBS) in Honk Kong including 10 Billion of 3-months CBS at 2.6 % and 15 Billion of 1-years CBS at 2.75%.

The 1-year Loan Prime Rate (LPR) and the 5-years LPR stay unchanged respectively at 3.85% and 4.65%.

  • The PBOC and Financial Authorities on the Corporate Bond Market opening up !

The PBOC, the National Development and Reform Commission, the Ministry of Finance and three other departments jointly issued a guideline supporting the reform and opening of corporate credit bond market.

Coordinated efforts will be made to open up the country’s inter-bank bond market and the bond market in the exchanges, with measures to unify the access of foreign institutional investors and the management of cross-border capital” as written in the documents.

The document lists 10 aspects of the corporate credit bond market focusing on legal system, information disclosure requirements, supervision of rating agencies. In addition, the financial authorities also reaffirmed the “zero-tolerance” policy against debt evasion activities.

  • PBOC data on Bonds Market !
Bonds Market July 2021 units
Bond Issuance 5,17 Trillion Yuan
— Treasury Bond 633,26 Billion Yuan
— Local Gvt Bonds 656,78 Billion Yuan
— Financial Bonds 879,74 Billion Yuan
— Corportate Credit bond 1,12 Billion Yuan
— Credit asset backed bonds 26,47 Billion Yuan
— Interbank deposit certificats 1,81 Trillion Yuan
Outstanding Bonds in custody 124,6 Trillion Yuan

 

Government Declarations

  • Chinese Government will builf carbon-pools areas in Shaanxi.

The National Development and Reform Commission (NDRC) declared that measures to stabilize manufacturing investment will be adopted. The major points are

  • Accelerate and support “Green Investment” in Manufacturing sector focus on carbon emission reduction and technological improvement
  • Support advanced manufacturing
  • Improve and help weak links in industrial and supply chain
  • Reduce costs

The country will boost green investment by encouraging investment in technological upgrading and stepping up policy support for the traditional manufacturing industry to reduce carbon emissions” said MENG Wei, the spokesperson of the NDRC.

  • Regulation of Internet and Digital industry !

The State Administration for Market Regulation unveiled a draft rule to prevent unfair competition in Internet sector. The main objective is to promote a market-based oriented and fair and healthy digital market protecting both consumer rights and interest of operators.The regulator solicits public opinion on the drats open to feedback until September 15.

Data published

July 2021 Units
Retails sales of consumer goods 3.5 Trillion yuan
— growth +8.5% yoy
— growth from 2019 +7.2% over 2 years
Energetic Raw Production July 2021 units Jan-July 2021 units
Natural Gas output 15.8 Billion m3 120.2 Billion m3
— growth +9.8% yoy +10.7% yoy
— growth from 2019 +15.1% over 2 years
Imports of Natrual  Gas 9.34 million tonnes
— growth +27% yoy
Crude Oil output 16.87 million tonnes 116.21 million tonnes
— growth +2.5% yoy +2.4% yoy
— growth from 2019 +3.1% over 2 years
Imports of Oil 41.24 million tonnes 301.83 million tonnes
— growth +19.6% yoy -5.6% yoy
Raw Coal Output 310 million tonnes 2.26 Billion tonnes
— growth -3.3% yoy +4.9% yoy
— growth from 2019 +4.8% over 2 years
Imports of Oil 169.74 million tonnes
— growth -15% yoy

 

Sources : Ministry of Finance, People’s Bank of China and the State Administration of Foreign Exchange, National Bureau of Statistics, Ministry of Commerce, Ministry of Finance, General Administration of Customs, State-owned Assets Supervision and Administration Commission

 

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