Home Asie Sector Report on China 27.09.2021

Sector Report on China 27.09.2021

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Financial Authorities Declarations

  • Flash News !

-The National Development and Reform Commission (NDRC) approved 11 Fixed Asset Investment (FAI) projects in August mainly in Transportation and power generation sectors amounting 100.6 Billion Yuan

-The State-owned Assets Supervision and Administration Commission (SASAC) declared the creation of a new State-Owned group in electrical equipment manufacturing called the China Electrical Equipment Group.

-Shenzhen City Authorities announced an issuance in Hong Kong of offshore Renminbi local Government Bonds amounting 5 billion Yuan schedule in October. Bonds maturing 2 years fot standards bonds while green bonds matured in 3 or 5 years.

The bonds will be listed on the Stock Exchange of Hong Kong, offering more Renminbi asset allocation options for international investors” said the Shenzhen municipal finance bureau.

-The Agricultural Development Bank of China (ADBC) issued the first Carbon-Neutral bonds for forest carbon sinks amounting 3.6 billion Yuan on September 23. The Bond will mature in 2-years.

  • The CSRC approved IPO !

The China Securities Regulatory Commission. (CSRC) approved IPO on the Shanghai STAR market of Liaoning Chengda Biotechnology Co., Ltd. and JEE Technology Co., Ltd.  In addition, the CSRC approved IPO of   Jiangsu Hualan New Pharmaceutical Material Co., Ltd., Shandong Linuo Group Holdings Co., Ltd., Runa Smart Equipment Co., Ltd. and Xinxiang Tuoxin Pharmaceutical Co., Ltd., Hangzhou Zhengqiang Corporation Limited and Shandong University Ouma Software Co., Ltd. on the Shenzhen ChiNext market.

IPO of Ningbo Dechang Electric Machinery Manufacturing Co., Ltd. and Hangzhou Flariant Co., Ltd. was approved on A-shares markets.

In addition, about 99.87 Billion Yuan of Lock-up shares will be tradable in the next week.

Central Bank Operations and declarations

Date Operations Maturity Amount Interest rate
September 22 Reverse Repo 7-days 60 Billion Yuan 2.2%
  Reverse Repo 14-days 60 Billion Yuan 2.35%
September 23 Reverse Repo 7-days 60 Billion Yuan 2.2%
  Reverse Repo 14-days 60 Billion Yuan 2.35%
September 24 Reverse Repo 7-days 120 Billion Yuan 2.2%
September 26 Reverse Repo 7-days 100 Billion Yuan 2.2%

 

The People’s Bank of China issued 5 Billion Yuan of Central Bank Bills in Hong Kong maturing in 6 months at a 2.5% interest rate.

The 1-year Loan Prime Rate (LPR) stay unchanged from previous month at 3.85%, the 5-Years LPR is also unchanged at 4.65%  according to National Interbank Funding Center (NIFC).

  • New regulation of Virtual currencies

The People’s Bank of China jointly declared with others financial authorities and regulators that « All virtual-currency-related business activities are illegal and should be strictly prohibited and cracked down upon in accordance with the law« . In addition, overseas virtual-currency exchanges are not allowed to provide any services for domestic investors via internet. The main goal is to forestall speculative behaviors related risks.

China’s policies for virtual currencies are consistent, virtual currencies do not have the same legal status as fiat currencies and cannot be circulated in the market. A raft of measures will be rolled out to strengthen virtual-currency regulation. Financial institutions and non-bank payment institutions are banned from offering services for virtual-currency-related business activities”, according to the PBOC.

The National Development and Reform Commission (NDRC) also add that the mining of virtual currencies is energy-intensive and produce carbon emissions for a small benefit to economy. Consequently, the ratio Pollution/Profit does not favor such activities.

The country will intensify regulation over the whole process of virtual currency mining and strictly prohibit new mining projects” the notice said.

Power generation companies are not allowed to provide electricity or develop new channel supply to currencies mining industries.

However, the NDRC also differentiate Virtual Currency mining and activities to others digital industries like blockchain or big data process with a greater potential for the economy and society development.

  • PBOC reform on Lending Facility

The PBOC announced reform of the standing lending facility process in a move to better satisfy liquidity needs.

The reform, which is referred to as empowering the whole process with electronic technology, will improve efficiency and better stabilize market expectations […] It will also enhance the stability of liquidity in the banking system and maintain the smooth operation of money market interest rates” said LIU Guoqiang, vice governor of the PBOC.

LIU Guoqiang also announced that 300 Billion Yuan of special central bank lending will be implemented soon to provide support for SME.

Government Declarations

Premier LI Keqiang called for a cross-cyclical adjustment to maintain the stability of economy.

Data Published

  Jan – Aug 2021 Units
SOE Operating Revenue 47.4 Trillion Yuan
— growth +24.9% yoy
SOE Profits 3.12 Trillion Yuan
— growth +75% yoy
Debt/asset ratio 64.3%  
— growth -0,2 PP yoy
Financial Institutions Q2 2021 Units
Financia Institutions Total Assets 371.26 Trillion Yuan
— growth +9.1% yoy
Bankings Total Assets 336 Trillion Yuan
— growth +8.6% yoy
Securities Institutions  Total Assets 11.27 Trillion Yuan
Insurrance Institutions Total Assets 23.99 Trillion Yuan
— growth +9.2% 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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