China issues strongest supervision standard for financial products

2017-11-20

Nov 13– Nov 17, 2017

China issues strongest supervision standard for financial products

China's top financial regulators issued guidance Friday for overseeing asset and wealth management products from all types of financial institutions, serving as the country's first unified and strongest supervision standard on this area of business. Financial institutions should reserve 10 percent of product management fees as a provision, unless the provision is higher than 1 percent of the products' total value, the guidance said. "Asset and wealth management products belong to off-balance business, so investment risks should be taken by investors themselves," it said. Personal investors cannot use bank lending as investment capital in these products, while enterprises with high debt levels are banned from this investment, according to the statement. It is the first unified regulatory standard covering all asset and wealth management products issued by banks and companies involved in securities, trusts, futures, insurance and fund management.

China to open up payment industry

China will open up its payment industry in a balanced and orderly way, Fan Yifei, deputy governor of the People's Bank of China (PBOC), said at a forum Thursday. The country would give overseas-funded financial institutions "pre-establishment national treatment," which means giving equal treatment to overseas and domestic companies even before they make investments, coupled with the negative list approach, according to Fan. "The government will significantly ease market access and push forward opening in the e-payment sector," Fan said at the Sixth China Payment and Clearing Forum. Front-end trading and settlement will be opened up first. Being an important part of the financial service, all payment businesses from public, private and foreign-funded institutions should ask for permission and be subject to supervision in the country. 

First RMB-denominated green bond issued in Paris

Bank of China (BOC), one of the country's four biggest lenders, has issued a green bond in Paris denominated in three currencies -- euro, US dollar and Chinese currency renminbi -- for a total equivalent amount of $1.5 billion, the bank said Thursday in a statement. It was the first issuance of a RMB-denominated green bond in the French capital, BOC Paris branch said in the statement. This bond has been certified by the international organization "Climate Bond Initiative", and was issued in three tranches, namely 700 millions of euro, 500 millions of US dollars, and 1 billion Chinese yuan, the bank said. This issuance has been subscribed by more than 230 investors, while the order book has been oversubscribed more than 2.6 times, the bank said in the statement. The proceeds are mainly for the construction of clean transport, renewable energy production and other green industry projects. The bond was expected to be listed on the Euronext stock exchange by the end of November, according to BOC Paris branch.

Sector Overviews

Top-and bottom-5 performing CITIC securities sectors of this week

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Indexes performance (as of Nov 17, 2017)

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Market Outlook

The federal Reserve turns hawkish in view of the steady economic growth in the US and embarked on the monetary policy normalization track after 10 years of rapid monetary expansion. Economy of the Eurozone is picking up pace, but the European Central Bank maintains a dovish stance possibly due to the different inflation levels across member countries. In Japan, the central bank continues to pursue ultra loose monetary policies with the purpose of stimulating economic growth. The balance sheet reduction and expected rate hike in the US, coupled with liquidity reduction efforts in Europe, may cause capital outflow from China. We expect the Chinese monetary authorities to counter the risk through moderate measures such as raising the interest rate of OMOs etc.