China Business Digest: May Industrial Profits Rise 6%; China to Launch Cross-Border WMP Connection in Greater Bay Area
China’s commercial banks may soon get a new weapon to compete with global rivals — securities licenses. Meanwhile, the country’s industrial profits rose 6% in May, the first increase since November. China will launch a pilot program to allow cross-border investment in bank wealth management products by residents of the Guangdong-Hong Kong-Macao Greater Bay Area.
— By Denise Jia (firstname.lastname@example.org)
** TOP STORIES OF THE DAY
China to connect wealth management markets in Greater Bay Area
China will launch a pilot program to allow cross-border investment in bank wealth management products (WMPs) by residents in the Guangdong-Hong Kong-Macao Greater Bay Area, the central bank said Monday. Chinese mainland residents in the Greater Bay Area, including Guangzhou, Shenzhen and seven other cities in Guangdong province, will be allowed to open special investment accounts with banks in Hong Kong and Macao to buy qualified WMPs, while residents of Hong Kong and Macao will be able to buy WMPs sold by mainland banks operating in the Greater Bay Area.
China plans to grant securities licenses to commercial banks
China’s top securities watchdog will begin granting securities licenses to at least two commercial banks in a move to create “aircraft carrier-size” investment banks amid the opening-up of the country’s financial markets, Caixin has learned from regulatory sources with knowledge of the matter. (Read the full story here.)
Commercial banks can currently underwrite corporate bond issuances in the interbank market, but they are barred from underwriting any deals involving stocks such as IPOs or secondary offerings.
Industrial profits increase for first time since November
The profits of major Chinese industrial enterprises rose 6% to 582.3 billion yuan ($82.3 billion) in May from a year earlier, marking the first increase since November, official data (link in Chinese) showed Sunday. That compared with a decline of 4.3% in April.
The mystery of 20 billion yuan of loans backed by fake gold
Nasdaq-listed Kingold Jewelry Inc. put up at least 83 tons of purported gold bars as loan collateral, but now lenders are finding some of it was just gilded copper. More than a dozen Chinese financial institutions lent the Wuhan-based company 20 billion yuan over the past five years, with Kingold saying it was putting up pure gold and insurance policies as collateral. (Read this week’s cover story here.)
** OTHER STORIES MAKING THE HEADLINES
Finance & Economy
• China’s central bank said on Sunday that it will continue guiding financial institutions to boost their support (link in Chinese) for small and midsize enterprises and private companies. It said the country’s economy still faces risks and challenges as the global pandemic situation remains severe, and work to prevent a domestic resurgence remains arduous.
• Guo Jizhuang, a former president of China Construction Bank Corp.’s provincial branch in Northwest China’s Qinghai, is under probe on suspicion of serious violations of law and Communist Party discipline, graft-busters said on Friday.
• Two city commercial banks — Panzhihua City Commercial Bank Co. Ltd. and Liangshan Prefecture Commercial Bank Co. Ltd. — in the southwestern province of Sichuan announced Friday that they will merge to create a new city commercial bank (link in Chinese), which could become the largest city commercial bank by registered capital.
Business & Tech
• China’s largest laundry detergent maker Blue Moon filed for an initial public offering (IPO) Monday with the Hong Kong stock exchange. The Guangzhou-based company didn’t disclose the size or timing of the IPO. China International Capital Corp., Citigroup and BofA Securities are listed as the leading sponsors for the offering, according to the prospectus.
• Chinese crypto mining giant Ebang International Holdings Inc. plans to launch an offshore exchange for digital assets this year. Revenue could almost double to $200 million this year with the launch of the crypto-exchange, Chief Financial Officer Chen Lei said in an interview.
• China’s three largest state-owned airlines, Air China Ltd., China Eastern Airlines Corp. Ltd. and China Southern Airlines Co. Ltd., on Sunday received their first short-haul, 90-seat ARJ 21 aircraft (link in Chinese) made by state-owned Commercial Aircraft Corp. of China Ltd.
• Beijing-Shanghai High-Speed Railway Co. Ltd. has officially launched a high-speed rail segment connecting the Anhui provincial capital of Hefei with the Zhejiang city of Huzhou as part of its plan to move beyond its lucrative core Beijing-Shanghai line.
• State Grid Corp. of China’s overseas unit, State Grid International Development Ltd., has acquired Chilean peer Chilquinta Energia SA for around $2.2 billion in cash as it builds up its global footprint.
• China on Monday increased domestic gasoline prices by 120 yuan a ton and domestic diesel prices by 110 yuan a ton, marking the first time the country has raised the prices of refined oil products this year. Gasoline prices are now around 7,000 yuan per ton in some regions, while diesel prices hover around 6,000 yuan generally.
• Singapore-based Lazada Group SA, Chinese e-commerce giant Alibaba Group Holding Ltd.’s Southeast Asian subsidiary, has named Li Chun as its new CEO. Previously, Li served as Lazada co-president and head of its Indonesia operations.
• Mining giant BHP Group and China Baowu Steel Group Corp. Ltd. have completed their first blockchain-based iron ore trade in a transaction worth around $14 million using tech firm MineHub Technologies Inc.’s platform.
• Since the beginning of this month, massive floods in China’s southern region has resulted in a total of 78 missing cases and deaths (link in Chinese), according to official data.
** ON THE CORONAVIRUS
• As of noon Sunday, the city of Beijing had collected nucleic acid Covid-19 test samples from about 8.3 million people and had completed testing for about 7.7 million of them, a local official said (link in Chinese). The number of test results is equal to about a third of the city’s population of long-term residents.
• The Chinese mainland reported (link in Chinese) 12 new coronavirus cases with symptoms Sunday, seven of those local cases in Beijing and the remaining five imported. The mainland added six new asymptomatic cases on the same day.
• As of Monday afternoon Beijing time, the number of coronavirus infections globally had reached over 10.1 million, with the death toll over 502,000, according to data compiled by Johns Hopkins University.
** AND FINALLY
During this year’s three-day Dragon Boat Festival public holiday that ended Saturday, domestic travel generated about 12.3 billion yuan nationwide, down 69% from the holiday period in 2019, according to data (link in Chinese) from the Ministry of Culture and Tourism. Travelers made 48.8 million domestic trips over the holiday, 49% less than during the same period the previous year (link in Chinese), as the impact of the Covid-19 pandemic continued to be felt in the hard-hit sector.
Visitors flocked to the West Lake in Hangzhou, Zhejiang province, on Thursday.
** LOOKING AHEAD
July 1: Release of Caixin China manufacturing PMI
July 3: Release of Caixin China services PMI
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