2018-08-08

CSRC Tries to Calm Market With Reform, NDRC Says More Targeted RRR Cuts Coming

SCMP: China says it will cut banks’ reserve ratios to support debt-to-equity swaps
“We will use monetary policy tools, including targeted RRR cuts, to actively provide stable, low-cost medium- to long-term funding for market-based debt-for-equity swaps”, the National Development and Reform Commission said.

The government will also let firms tap capital markets, including raising funds via initial public offerings, to help their debt-to-equity swaps and deleveraging, and speed up the elimination of zombie firms, indebted or loss-making companies that need government support to continue operating, the commission said.
Reuters: China to ease regulations on QFII, RQFII to expand foreign capital investment scope - regulator
China’s securities regulator said on Wednesday it will revise regulations on the Qualified Foreign Institutional Investor(QFII) and the Renminbi Qualified Foreign Institutional Investor(RQFII) schemes to ease access and expand the scope of foreign capital investment.

China Securities Regulatory Commission (CSRC) also said on its website it will support an increase in the proportion of A-shares in the MSCI index and improve rules on share buybacks by listed firms to optimise the capital structure of public companies.
Xinhua: China strives for steady growth of capital market
The country will implement policies to relax the control over the ratio of foreign investment in the securities sector, according to a statement from the China Securities Regulatory Commission (CSRC).

China will allow 51-percent foreign ownership of brokerages, futures dealers, and life insurers, and remove the cap entirely by 2021, according to a new negative list for foreign investment released in June.

The country will also make active preparations for launching the Shanghai-London stock connect program within the year, the CSRC said.

Efforts should also be made to amend rules on qualified foreign institutional investors to standardize and expand market access, it said.

The commission will continue to improve its systems for approving initial public offerings and supervising mergers and acquisitions while improving and resolutely implementing the delisting policies, the statement said.

It will also boost its capability of serving investment banks in a bid to explore the creation of investment banks with global competitiveness.
Chinese language coverage at iFeng: 证监会“稳市场”放大招:深化改革扩大开放 依法全面从严监管

These two charts from the iFeng article show Chinese companies are stepping up their buybacks. The first shows amount, second the number of firms (red bars). The blue line in both charts is the Shanghai Composite.
This chart shows flows are coming in through the stock connect. Gray Shanghai, orange Shenzhen.
In terms of investor protection, Pan Xiangdong believes that in the first half of the year, the CSRC actively guided listed companies to increase cash dividends, increase returns to investors, promote investor protection, and strengthen regulatory restrictions on listed companies that did not perform dividends for a long time, thereby promoting China's capital market. The formation of a value investment philosophy encourages long-term and value investment.

The CSRC also stressed that the system must adhere to the basic guidance of Xi Jinping's socialism with Chinese characteristics in the new era, firmly establish the "four consciousnesses", earnestly implement "two resolutely safeguards", and resolutely implement the Party Central Committee and the State Council on economic and financial work. The decision-making and deployment, adhere to the general tone of steady progress, and implement the requirements of the “six stables” in all aspects of the supervision of the capital market. Under the unified command and coordination of the financial committee of the State Council, comprehensively deepen the reform of the capital market and expand the opening up. The capital market is developing steadily and healthily, and it is better to provide supply-side structural reforms and high-quality economic development.

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