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FINANCE

By Ke Baili / Jul 22, 2019 01:11 PM / Finance

Photo: Caixin

Photo: Caixin

China's new NASDAQ-style high-tech trading board blasted off with a bang on Monday, with all 25 stocks currently listed on the board rising from their IPO price in morning trading despite several slumping from a high opening price.

Stocks on the new board rose by an average of nearly 160% from their IPO prices in morning trading. Anji Microelectronics Technology (Shanghai) Co. performed best, ending morning trading up over 400% from its IPO price after paring gains of over 520%.

Only three of the 25 stocks didn't hit a circuit breaker causing trading to be automatically suspended for 10 minutes, with 14 being paused due to a rise of 30% from their opening price and eight being paused after falling 30%. Analysts had expected high volatility amid looser trading rules and massive demand for the newly listed stocks.

Unlike China's other boards, the so called STAR high-tech board has no daily trading limits in place for the first five days of trading. The trading suspension mechanism is intended to allow the market to cool off and reduce irrational speculation, according to the securities regulator.

The new board is the first in China to trial an IPO system based on registration rather than regulatory approval. The aim of the change is to let investors and the market decide on the price, the practice followed in other countries, rather than the regulators.

Related: China to Launch SSE STAR 50 Index to Track New Nasdaq-Style Board

Contact reporter Ke Baili (bailike@caixin.com)


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FINANCE

By Bloomberg / Jul 22, 2019 10:44 AM / Finance

Photo: Bloomberg

Photo: Bloomberg

The cash reward for owning Taiwan stocks is larger than almost anywhere else in Asia. Global investors are ditching them anyway.

Even with the benchmark Taiex gauge near a record high, managers have pulled about $680 million from Taiwan stock funds this month, more than any other market in the region. The withdrawals come even as corporate dividends top U.S. yields and just as a record amount of debt globally yields less than zero.

Investors who leaped into Taiwan stocks earlier this year aren’t eager to do it again: the economy’s firms are so entwined with the global technology supply chain that they’ve been particularly vulnerable to the trade war and a slowdown in the smartphone market.

"High dividend yields make Taiwan stocks attractive to global investors in a low interest rate environment, but it’s only one of the elements to consider," said Agnes Lin, a global market strategist at JPMorgan Asset Management Taiwan Ltd. The island’s weak economic fundamentals, partly the result of the U.S.-China trade clash, are also turning investors off the equities, she said.

The Taiex measure rose 0.5% as of 9:08 a.m. Monday in Taipei.

Related: Populist Mayor Becomes Opposition Nominee for Taiwan Leader

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By Bloomberg / Jul 22, 2019 10:37 AM / Finance

Photo: Bloomberg

Photo: Bloomberg

China’s new stock venue designed for technology startups got off to a positive start on Monday as all 25 stocks rose on their debut.

Anji Microelectronics Technology (Shanghai) Co. was among the top performers, rising as much as 329% before paring gains. Endorsement from top officials helped generate such enthusiasm that firms on the board raised a combined $5.4 billion, about 20% more than planned. Demand from retail investors has outstripped supply by an average 1,800 times, even as some analysts voiced concern over lofty valuations.

Modeled after the Nasdaq Stock Market in the U.S., the so-called STAR board is China’s latest attempt to avoid losing the next Alibaba Group Holding Ltd. or Tencent Holdings Ltd. to exchanges in New York or Hong Kong. It’s also a testing ground for regulators, who have waived rules on valuations and first-day price limits for the first time since 2014. The venue will be the first in China to welcome companies that have yet to make a profit, as well as shares with unequal voting rights.

Related: China to Launch SSE STAR 50 Index to Track New Nasdaq-Style Board

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By Han Wei and Zhang Yu / Jul 19, 2019 05:52 AM / Finance

Photo: VCG

Photo: VCG

AssetMark Financial Holdings Inc., a California-based unit of Chinese brokerage Huatai Securities, made a strong public debut Thursday in New York, opening at $25.45 after being priced at $22 a share in a $275 million listing.

Traded under the ticker symbol AMK, the wealth management and technology provider rose more than 20% by 12:30 p.m. AssetMark finished the day at $27.04.

AssetMark priced its initial public offering late Thursday at $22, above its marketed range of $19 to $21.

AssetMark offered 12.5 million shares, including 6,250,000 shares by the company and 6,250,000 shares by Huatai, on the New York Stock Exchange. Huatai will remain as controlling shareholder after the listing.

Proceeds of the offering will be used to pay down debt and for working capital, AssetMark said in its IPO filings. JPMorgan, Goldman Sachs, Credit Suisse, Huatai Securities (USA), BMO, Raymond James and William Blair are underwriters on the deal.

Huatai acquired AssetMark in 2016 for $768 million as its first overseas asset purchase. The Chinese broker recently stepped up efforts to expand abroad with a $1.5 billion sale of stock via the Shanghai-London Stock Connect program, making it the first jointly listed London-Shanghai stock.

Related: Huatai U.K.-China Link Debut May Spur More Cross-Border Listings


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By Quan Yue and Denise Jia / Jul 19, 2019 05:40 AM / Finance

Photo: VCG

Photo: VCG

Donghai Securities Co. Ltd., a brokerage listed on China’s over-the-counter market, confirmed Thursday that its chairman was “assisting authorities with an investigation” and resigned.

The company said it received a phone call late Tuesday from the public security department of Jiangsu province, where the brokerage is located, saying that Zhu Kemin, chairman of Donghai, is cooperating with an investigation.

Zhu, a former government official who previously held various positions in local governments, the Ministry of Finance and the top securities regulator, submitted his resignation to the board effective Tuesday, the company said. Zhu doesn’t hold any shares of the company.

Donghai Securities didn’t disclose on what matter Zhu is being investigated, but the company received three regulatory penalties this year for lack of risk control in its overseas subsidiaries, inadequately qualified personnel and misuse of funds.

Donghai Securities’ largest shareholder is state-owned Changzhou Investment Group Co., with a 21.59% stake.

The board named director Chen Yaoting as interim chairman for no more than six months. Chen is a vice president of Changzhou Investment Group.

Related: Private Equity Boss Faces Life in Jail After Bilking Investors
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By Peng Qinqin and Denise Jia / Jul 17, 2019 09:22 AM / Finance

Photo: VCG

Photo: VCG

China’s state planner announced measures Tuesday to speed up the exit of “zombie companies” from the market and proposed establishing a personal bankruptcy system.

This was the first time China explicitly proposed a plan to establish a bankruptcy system for insolvent individuals.

The guidelines released by the National Development and Reform and Commission (NDRC) and a dozen other central government agencies call for an exit system for all types of market entities, including state-owned enterprises, aiming to create a smooth and cheaper exit path for failing companies.

People close to the regulators said the guidelines represent a long-term reform plan, mainly to clarify the direction and objectives, while specific measures still need to be pushed forward.

The NDRC will work with the Ministry of Justice, the central bank and the banking regulator to study a mechanism for individuals to file for bankruptcy, the guidelines said.

The first step will focus on resolving the joint liabilities of natural persons resulting from business bankruptcy and then gradually establish rules covering individuals’ consuming debt.


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By Bloomberg / Jul 17, 2019 02:40 AM / Finance

Photo: VCG

Photo: VCG

The trading division of China’s biggest food company obtained a $2.1 billion loan that links all of its main financing lines to environmental targets.

Cofco International Ltd.’s deal marks the first time a Chinese mainland company has embraced this new kind of financing agreement, known in the industry as a sustainability-linked loan. The deal offers lower interest rates in exchange for meeting targets such as tracing the origins of its soybeans to ensure they don’t contribute to deforestation in Brazil.

ING Group NV, Rabobank Group and Banco Bilbao Vizcaya Argentaria SA are the sustainability coordinators of the Cofco International loan. ABN Amro Group NV is the coordinator.

Cofco International estimates savings of about $1 million a year by meeting its targets and plans to spend the money funding its own sustainability goals, such as reducing the use of fossil fuels.

The loan includes three tranches with one- and three-year tenors. It’s priced 80 basis points above the London Interbank Offered Rate on the one-year tranche and 90 basis points on the three-year tranche. The loan’s margin offers as much as 5 basis points of incentive or premium depending whether targets are met. A basis point is a hundredth of a percentage point.

Cofco’s deal ranks among the world’s biggest sustainability-linked loans and the largest in the commodity trading industry. It will replace existing revolving credit and term-loan facilities, making it the first time a commodities trader tied its core source of trade finance capital to green targets.

Related: For Bond Investors in China, It’s Not Easy Buying Green


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By Tang Ziyi / Jul 16, 2019 03:49 PM / Finance

Photo: IC Photo

Photo: IC Photo

Since May, China has faced a nationwide confidence crisis in small financial institutions after regulators took over Baoshang Bank, dubbing it a “severe credit risk.” It was the first time in 20 years that Chinese authorities had directly assumed control of a private lender.

Baoshang was controlled by Tomorrow Holding Co. Ltd., a conglomerate whose billionaire founder Xiao Jianhua is the subject of a graft investigation by Chinese authorities and has not appeared in public since January 2017.

Regulators must have known long before the takeover that Tomorrow Holding’s sprawling empire illegally controlled a large number of financial institutions, but likely failed to act in a timely manner due to a lack of accountability mechanism, writes Ling Huawei, managing editor of Caixin Media and Caixin Weekly, in an article for the latter publication.

Related: Opinion: Baoshang Takeover Marks Sea Change in China’s Wealth Management Industry

Contact reporter Tang Ziyi (ziyitang@caixin.com)


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By Tanner Brown / Jul 11, 2019 10:33 AM / Finance

Photo: VCG

Photo: VCG

The Waldorf Astoria Hotel in New York and the Four Seasons Hotel in Wyoming are just two of the trophy assets of fallen financial star Anbang Insurance Group Co. Ltd. that are now in the hands of a little-known state-run bailout company, China Insurance Security Fund Co. Ltd. (CISFC).

The agency, whose functions include rescuing or liquidating insurance companies and operating the insurance industry’s bailout fund, has played a key role in defusing the risks built up by Anbang, which was put under government control in February 2018.

Since becoming Anbang’s biggest shareholder in April 2018, CISFC has been the vehicle for regulators to restructure the troubled insurer and sell off its assets. A new company, Dajia Insurance Group, was set up in June with registered capital of 20.4 billion yuan ($3 billion) to deal with the assets and operations of Anbang. CISFC holds 98.2% of the shares of Dajia.

So far, the company has disposed of or is in the process of disposing of more than 1 trillion yuan of assets, Liang Tao, a vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said Thursday at a press briefing.

Here are four more things you need to know about CSIFC.

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By Bloomberg / Jul 10, 2019 02:34 AM / Finance

Photo: VCG

Photo: VCG

Shares of Chinese education companies fell in Hong Kong after the government said it would tighten oversight of compulsory schooling and businesses providing tutoring services.

China Maple Leaf Educational Systems Ltd., China Xinhua Education Group Ltd., China New Higher Education Group Ltd. and Wisdom Education International Holdings Co. all retreated at least 3.2%.

New guidelines issued by the State Council covering the first nine years of schooling aim to better regulate "noncompliant, off-campus" classes and competition. The government also said officials would oversee registration, fee, advertising and antitrust issues for public and private schools.

In August, China issued draft legislation to amend rules governing the lucrative private education industry, troubling investors who regarded the sector as a safe bet amid escalating trade tensions with the U.S.

Rather than spending extra time on academics outside of school, Beijing wants students to master multiple skills in sports and art, the government said in a statement Monday.

The new rules could have a long-term impact on demand for after-school tutoring, China International Capital Corp. analysts Natalie Yue Wu and Yuzhong Gao wrote in a note. The guidelines also prohibit the use of foreign curriculum and textbooks, which would hurt Maple Leaf, according to Citigroup Inc.

Related: In Depth: Famous Prep School Runs Afoul of Government Crackdown

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By Timmy Shen / Jul 08, 2019 03:51 PM / Finance

Photo: VCG

Photo: VCG

Social networking giant Facebook published a white paper on its cryptocurrency project Libra last month, drawing the attention of major regulatory authorities worldwide. 

Whether from the perspective of monetary policy or macroprudential management, Libra, a convertible digital currency that can flow freely across borders, should receive support and supervision from central banks and be incorporated into their regulatory frameworks, Mu Changchun, a deputy head of the People’s Bank of China’s Payment and Settlement Department, said in an article published in Caixin Weekly.

Libra won’t be pegged to one specific fiat money, but will be backed by “a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks,” the white paper said. 

Read Mu’s full analysis on how Libra will affect monetary policy, macroprudential management and the technology roadmap of digital currency on Caixin Global later today.

Related: Opinion: Facebook’s Libra Must Be Stopped

Contact reporter Timmy Shen (hongmingshen@caixin.com)

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By Zhang Yuzhe, Wu Hongyuran and Teng Jing Xuan / Jul 08, 2019 11:38 AM / Finance

Photo: VCG

Photo: VCG

The government takeover of Baoshang Bank in May put China’s national deposit insurance fund to the test for the first time since it was set up more than four years ago.

On the day of the takeover, the central bank created the Deposit Insurance Fund Management Co. Ltd. to manage the 100 billion yuan ($14.5 billion) deposit insurance fund. Before that, there was no way for the deposit insurance fund to inject funds into Baoshang Bank, a person close to the central bank told Caixin. 

Now the takeover has thrown a spotlight on doubts that continue to plague the nascent deposit insurance system, including the fund’s small size relative to the country’s total deposits, vague responsibilities described by deposit insurance regulations, and a lack of independence from the central bank.

Read Caixin's in-depth coverage here.

Contact reporter Teng Jing Xuan (jingxuanteng@caixin.com)

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/ Jul 06, 2019 03:44 AM / Finance

Photo: VCG

Photo: VCG

China will allow brokerages hit by major liquidity risks to seek support from the state-backed investor protection fund, the top securities regulator said Friday.

The China Securities Regulatory Commission published for public comment a set of draft rules on managing securities firms’ liquidity. The rules outline several ways that brokerage companies could deal with liquidity crises including asset sales and seeking support from shareholders, banks and market peers.

Brokerages could apply for liquidity support from the state-backed China Securities Investor Protection Fund if liquidity risks can’t be mitigated through self-rescue or market-oriented measures, said the draft rules.

Brokerages should put up equivalent collateral for loans from the Investor Protection Fund, which will charge borrowers 1.5 times the market lending rate, according to the proposed rules. A loan term should be no longer than one year but could be extended for an additional year in a severe crisis. Interest income will supplement the fund designated for investor protection, according to the rules.

The Investor Protection Fund could use no more than 80% of its outstanding funds to support companies and lend no more than 30% of its funds to a single company, according to the rules.

Related: China Asks Big State-Owned Banks to Back Top Brokerages
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By Zhang Yu and Han Wei / Jul 06, 2019 03:24 AM / Finance

Photo: VCG

Photo: VCG

China’s new Nasdaq-style high-tech board will host the first batch of listings on July 22, the Shanghai Stock Exchange said Friday.

At least 25 companies will be the first to debut on the SSE STAR Market, a new trading venue hosted by the Shanghai bourse targeting companies in high-tech and innovative sectors. The new board is also a testing ground for several securities market reforms including a registration-based initial public offering mechanism.

As of July 4, the Shanghai Stock Exchange received 141 applications for listing on the new board. The bourse has flashed a green light to 31 applicants, 25 of which have successfully registered with the securities regulator.

The first movers will include display and touch-testing equipment maker Suzhou HYC Technology Co. Ltd., sensors developer Yantai Raytron Technology Co., Ltd. and precision instrument maker Suzhou TZTEK Technology Co. Ltd.

The Shanghai bourse said Friday that the new board will conduct system tests as final preparation for the debut.

Investors have shown great enthusiasm for the new listings. Many candidates have expanded their fundraising size as high demand bolstered their valuations.

Related: Retail Investors Join Frenzy Around New Tech Board Listings


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By Wu Yujian, Wu Hongyuran and Timmy Shen / Jul 04, 2019 10:50 PM / Finance

Photo: Bloomberg

Photo: Bloomberg

Scandal-ridden Anbang Insurance Group Co. Ltd. has seen more of its assets cleared out under the supervision of a government group tasked with defusing its risks.

Anbang and its property insurance subsidiary have decided to sell a combined 100% stake in Hexie Health Insurance Co. Ltd. to five investors, the health insurer said in an announcement. After the equity transfer, Fujia Group Co. Ltd., a privately owned company with businesses in petrochemicals, real estate and finance, will hold a 51% stake in Hexie, becoming its biggest shareholder.

The transaction has gained approval from the government group that took over Anbang in February 2018, and is pending approval from the China Banking and Insurance Regulatory Commission (CBIRC), according to the announcement.

The stake transfer marks the latest disposal of an Anbang asset. Since the government takeover, Anbang has disposed of or is in the process of disposing of more than 1 trillion yuan ($146 billion) in assets in total, CBIRC Vice Chairman Liang Tao said Thursday at a press briefing.

Last year, Anbang’s founder and former chairman Wu Xiaohui was sentenced to 18 years in prison for fundraising fraud and embezzlement.

Related: An Era Ends at Anbang as Founder Sentenced to Prison

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By Wu Xiaomeng and Ke Baili / Jul 04, 2019 04:13 PM / Finance

Photo: VCG

Photo: VCG

A third city commercial bank will get the green light to set up a wealth management subsidiary, in the first batch of such approvals in China, sources told Caixin. 

Huishang Bank, based in Anhui province, will join another two medium-sized lenders — Bank of Hangzhou and Bank of Ningbo, both based in Zhejiang province — in the first batch of city commercial banks allowed to follow larger rivals in becoming eligible to set up such subsidiaries, according to sources. The first batch will only consist of these three banks, they said.

Subsidiaries will allow banks to operate with fewer restrictions on investments using wealth management funds, under rules released late last year. The aim is to create a firewall between wealth management businesses and banks’ other operations, in an effort to break any implicit guarantee that these investments will be bailed out if they sour. The $4.6 trillion bank wealth management product industry has been a key part of China’s risk-spawning shadow banking system.

Contact reporter Ke Baili (bailike@caixin.com)

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By Liu Jiefei and Wei Yiyang / Jul 04, 2019 12:58 PM / Finance

Photo: VCG

Photo: VCG

Hong Kong’s securities regulator has banned a former Goldman Sachs banker from working in the city's finance industry for life in connection with his involvement in the 1Malaysia Development Berhad (1MDB) corruption scandal.

Tim Leissner, former banker with Goldman Sachs (Asia) LLC, pleaded guilty in August 2018 to criminal charges brought by the United States Department of Justice against him for conspiring to commit money laundering and to violate the Foreign Corrupt Practices Act, the Hong Kong Securities and Futures Commission said in a statement on Wednesday.

Leissner admitted to bribing government officials in Malaysia and Abu Dhabi in order to gain and retain 1MDB’s business for Goldman Sachs, embezzling funds from 1MDB, and money laundering, the statement said. He demonstrated “a serious lack of honesty and integrity,” it said.

1MDB is an insolvent state fund owned by Malaysia’s government, which claimed to have founded the fund to forge global partnerships and promote foreign direct investment. Former Malaysian Prime Minister Najib Razak faces criminal charges related to losses at the fund, and has pleaded not guilty.

Contact reporter Liu Jiefei (jiefeiliu@caixin.com)

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By Shen Xinyue and Han Wei / Jul 04, 2019 04:37 AM / Finance

Photo: VCG

Photo: VCG

Leading baby formula maker China Feihe Ltd. is making a renewed attempt to list its shares in Hong Kong, two years after it shelved the plan because of merger issues.

Feihe filed for an initial public offering with the Hong Kong stock exchange without setting the offer size and pricing, the bourse said Wednesday. Bloomberg reported in March that Feihe could raise as much as $1 billion in the Hong Kong offering.

Feihe’s revenue expanded three-fold since its last IPO attempt in 2017, boosted by fast growth in its infant formula business. Feihe achieved higher profit margins by promoting higher-end products while spending heavily to expand its sales network in smaller cities, analysts said.

The company booked 10.4 billion yuan ($1.5 billion) of revenue in 2018, a 76.5% rise from a year earlier. Net profit rose 93% to 2.2 billion yuan, according to the preliminary prospectus. Feihe said it set a sales target of 15 billion yuan this year.

Feihe is now the largest player in China’s milk powder market with 15.6% in 2018, according to consulting firm Frost & Sullivan.

Feihe floated in the U.S. in 2003 and was privatized in 2013 for the Hong Kong listing that was later suspended.

Related: Leading Dairy Yili Eyes 2 Billion Global Customers by 2020


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By Zhao Runhua and Qu Hui / Jul 03, 2019 05:32 PM / Finance

Photo: VCG

Photo: VCG

The stock price of Hong Kong-listed real estate developer Future Land Development Holdings plunged 24% after media reported that parent company Chairman Wang Zhenhua allegedly molested a child.

According to Xinmin Evening News, Shanghai’s local publication supervised by the Communist Party, last Saturday, two girls — one 9 years old and one 12 years old— were brought to a hotel in Shanghai from East China’s Jiangsu province by a woman surnamed Zhou, who was friends with the girls’ parents. Zhou told the parents she was taking the girls to the Shanghai Disney Resort.  

Wang allegedly molested the 9-year-old girl and paid Zhou 10,000 yuan cash ($1,452), Xinmin reported. The girl then called her mother on the phone, crying. The mother rushed to Shanghai to report the incident to the police. A medical examination showed the girl had suffered injuries to her genitals, Xinmin reported.  

Local police later took “coercive measures” against Wang — a euphemism for actions like detention, Xinmin reported, citing sources familiar with the issue.

Caixin could not reach Wang for comment. The company has yet to respond to the media report.


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By Yang Ge / Jul 03, 2019 11:51 AM / Finance

Photo: VCG

Photo: VCG

It’s another giddy day for the steel bulls, as domestic prices for iron ore futures charge to new highs not seen for more than five years.

Domestic contracts for iron ore due in September were up about 2% on the commodities trading market in Dalian in morning trade, extending a 5% gain from the previous day. At their current levels of about 900 yuan ($131) per ton, prices haven’t been this high since early 2014.

Iron ore prices have had a rough time over the last five years due to weak demand, as China cleaned up its bloated steel sector through consolidation and mass elimination of excess capacity. With that cleanup largely in the rear view mirror and recently rising prices for finished steel, and also the elimination of supply due to an accident in Brazil last year, ore prices have nearly doubled since late last year.

Contact reporter Yang Ge (geyang@caicin.com)


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