Quick Take: Beijing Becomes Latest City to Bail Out Local Firms
Beijing has become the latest city to come up with a bailout plan for local companies whose shares have come under pressure from a growing stock-pledged loan fiasco.
With Chinese mainland stock markets approaching four-year lows, creditors such as brokerages and banks have been increasingly dumping stock that had been pledged as collateral by major shareholders. The terms of these loans mean that when the price of pledged stock dips to a certain point, the creditors take possession of the stock. These sales have put further pressure on company stock prices, amplifying a vicious cycle that has led to even more dumping as creditors call in the collateral.
To defuse the risks, the local government of Shenzhen is planning to inject at least 15 billion yuan into nearly 30 local listed companies, Caixin has reported. Shunde, a manufacturing hub in Guangdong province, is also considering a similar plan.
On Oct. 16, the Beijing bureau of the China Securities Regulatory Commission (CSRC) called together 23 banking and brokerage creditors of Shenzhen-listed Beijing Orient Landscape & Environment Co. Ltd., instructing them not to dump company shares or freeze the company’s assets.
In addition, the government of Beijing’s Haidian district announced it will establish a rescue fund worth 10 billion yuan ($1.44 billion) to bail out local listed tech firms facing the same problem. There were 306 listed companies registered in Beijing at the end of 2017, with at least 126 tech-heavy firms in the district.
Haidian said the fund will be jointly set up with Dongxing Securities Co. Ltd., a subsidiary of one of China’s big-four bad-asset managers, China Orient Asset Management Co. Ltd. The district said it already has 2 billion yuan in rescue funds ready to disperse.
Contact reporter Leng Cheng (firstname.lastname@example.org)
Feb 15 11:02
Feb 14 18:07
Feb 14 13:36
Feb 14 10:42
Feb 13 13:34
Feb 13 09:49
Feb 12 17:51
Feb 12 14:07
Feb 12 13:11
Feb 11 17:52
Feb 11 16:08
Feb 11 14:01
Feb 11 13:13
Feb 10 17:35
Feb 10 16:30
- 1Coronavirus Latest (Feb. 1 - 15): Cases Surge Past 66,500 as France Reports First Death
- 2Coronavirus Study Finds Incubation Period of Up to 24 Days
- 3In Depth: ICU Doctors Bear the Brunt as Coronavirus Causes Rapid Deterioration
- 4Intensive Care Doctor Tells of a Hospital Teetering on Collapse in Wuhan
- 5Even With Massive Funding, Coronavirus Vaccine Isn’t Coming Soon
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas