China inaugurates first bank-invested trust company

(Xinhua)
Updated: 2007-10-29 06:39

Wuhan — China’s first bank-invested trust company is officially set up in Wuhan, capital of central China’s Hubei Province, on Sunday.

The new trust company is held by the Bank of Communications (BOCOM), China’s fifth largest lender, and Hubei provincial finance department, which control 85 percent and 15 percent of the total shares respectively.

The BOCOM invested 1.2 billion yuan (about US$160m) to buy the shares of the Hubei international trust and investment company, the first commercial bank investment in a trust company approved by the China Banking Regulatory Commission.

Jin Dajian, chairman of the new company named “jiaoyin-guoxin”, or BOCOM-International Trust, said the company would focus on “professional wealth management”.

Jin called the establishment of the new trust company “a breakthrough for China’s trust industry”, given that the country’s law on commercial banks, effective since 1995, did not allow commercial banks to make trust investment.

The regulation was not lifted until the end of last year, when the China Banking Regulatory Commission encouraged financial institutions, including commercial banks, to acquire trust companies.

The BOCOM, a large state-owned commercial bank, was established in 1908, and the Hubei international trust investment company was founded as a non-banking financial institution under Hubei provincial government in 1981.

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Chinese shares hit another record high

(Source: Xinhua)

BEIJING, Oct. 17 – China’s main stock index on Tuesday closed on 6092.06 points, up 1.03 percent on the previous day, after reaching as high as 6,124.04 in the middle of trading. The benchmark Shanghai Composite Index broke the 6,000-point mark for the first time on Monday. Turnover, however, fell to 163.5 billion yuan from 195.3 billion yuan. The Shenzhen Component Index on the smaller market began its trading on 19,139.93 points and closed on 19,358.44 points, up 1.41 percent. The bourse’s turnover shrank to 67.1 billion yuan from 77.5 billion yuan on Monday. The new record was achieved largely due to strong performances by banking and coal mining shares. China Merchants rose by 2.3 percent to 42.08 yuan; Bank of China jumped 7.7 percent to 7.04 yuan and Bank of Nanjing rose 8.1percent to 21.54 yuan. China Construction Bank Corp rose 0.18 yuan to 10.13 yuan and Industrial and Commercial Bank of China was up 0.29 yuan to 8.15 yuan. Shanxi Xishan Coal and Electricity Power hit the 10 percent daily cap to end at 74.80 yuan while Yanzhou Coal Mining rose 5.2 percent to 26.95 yuan. (One U.S. dollar equals 7.51 yuan)

 

China’s major stock indices down

(Source: Xinhua)

BEIJING, June 25 — China’s share prices plummeted Monday against speculation over possibility of further interest rate hike, with the benchmark Shanghai Composite Index down 3.68 percent, or 150.36 points, to close at 3,941.08. The key Shanghai index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, was traded between 3,912.42 and 4,131.13 on turnover of 143.3 billion yuan (18.9 billion U.S. dollars). The Shenzhen Component Index on the nation’s smaller bourse fell 4.5 percent, or 616.46 points, to end at 13,109.26 on turnover of 75.56 billion yuan (9.9 billion U.S. dollars).

 

Stocks up amid price correction

By Li Zengxin (chinadaily.com.cn)
Chinese stocks had short-spread price adjustments for the whole day today, after yesterday’s strong growth. The Shanghai Composite Index closed at 4,269.52, up 16.18 points or 0.38 percent from Monday’s closing. Total turnover in the stocks enclosed by the major indices was 273.8 billion yuan, slightly lower than that of yesterday.The benchmark index, opening lower from 4,247.75, dived deep before climbing up in the morning. After hitting the daily highest point at 4,280.85, it slipped down to the lowest at 4,209.58 soon before the mid-day break. In the afternoon, it resurged to the higher levels but failed to form an upward trend.

Shanghai Composite Index
Source: www.sina.com.cn

At the Shanghai exchange, 508 A shares went up, 269 closed down and 62 finished unchanged. Hunan Jinjian Cereals Industry rose 10.05 percent to 10.29 yuan on top of the gainer’s list. Jiangsu Zhongda New Material Group and Lingyun Industrial were also sealed at the maximum cap of 10 percent rise. Xinjiang Hops, however, again dropped 5.02 percent as the biggest loser.

China Unicom, with the largest trading volume, gained 0.15 yuan and Younger Group, with the largest transaction value, surged to 32.41 yuan with a perfect 10 percent rise.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, closed at 14,336.40, up 141.85 points or 1 percent. It went through the day within a range from 14,057.62 to 14,342.91.

Shenzhen Component Index
Source: www.sina.com.cn

Of its A shares, 371 were up, 172 down and 70 flat. Sundiro Holding rose 10.07 percent on the top while Jiangxi Ganneng led the downfall. The largest traders, TCL and China Vanke both hiked more than 4 percent.

Shares in the culture and media, real estate and electronics industries gained the largest proportions today. China Television Media went up nearly 10 percent to 33.59 yuan, leading the media sector on the top gainer’s list. The transportation sector was also strong.

The bull run in closed-end fund didn’t continue, as both of the fund indices in the two exchanges dropped today. B shares were up. Of the 109 B shares listed on the two exchanges, 71 went up and 10 ended flat. Shanghai Lingyun Industries Development pioneer the B-share section on a surge.

After 10 days of growth, the stock market has recovered from the loss by the stamp tax hike on May 29. By yesterday, the total market value of all securities in the two stock exchanges was 18,515.7 billion yuan, surpassing that of May 30 and close to May 29.

On the other hand, the consecutive surges in share prices last week didn’t bring more new investors in the A-share market, as daily new A-share account opening was mostly kept below the 200,000 mark. Instead, a rush to subscribe for the four new mutual funds was seen with a steady growth in fund accounts. The four funds raised over 100 billion yuan, refreshing previous record volumes for a single week.

New Account Opening
Source: China Securities Depository and Clearing Co Ltd

Date	A share	B share	Fund	Total
2007-06-11	212,746	2,274	27,105	242,125
2007-06-12	182,020	2,118	34,927	219,065
2007-06-13	187,145	2,107	139,372	328,624
2007-06-14	192,174	1,882	74,794	268,850
2007-06-15	190,202	2,060	63,378	255,640

The year-long bull market has also led to a frenzy of speculation. The China banking regulator said Monday it has punished some local branches of eight banks for failing to prevent two clients from misappropriating loans of 4.46 billion yuan, of which 2.5 billion yuan was believed to have been invested in the stock market for higher returns from initial public offering (IPO) subscriptions.

The eight banks concerned are the Bank of Beijing, the Beijing branch of Bank of Communications and the Shanghai outlets of China Merchants Bank, the Industrial and Commercial Bank of China, China CITIC Bank, Bank of China, the Industrial Bank and Shenzhen Development Bank.

There is good news for banks though. China’s city commercial banks will lead the next listing waves, after most of the State-owned commercial banks have already gone public. Bank of Nanjing and Bank of Ningbo will be the first ones to be examined by the China Securities Regulatory this Friday.

Bank of Beijing has also filed its application for IPO to the commission. Hangzhou City Commercial Bank, Chongqing Commercial Bank and Bank of Shanghai are in the preparation process. City commercial banks of Xi’an, Nanchong, Jinan and Tianjin also expressed their willingness to issue A shares.

The red-chip returning wave saw China Mobile as the latest move yesterday. The world’s largest cellular phone operator is planning a multibillion-dollar share sale in Shanghai as early as next month to attract domestic investors. The deal could raise as much as 80 billion yuan (US$10.49 billion), sources familiar with the situation said on Monday.

 

Insurers to buy Minsheng stake

 China Life Insurance Co and Ping An Insurance (Group) Co, the country’s two largest insurers, said they will each pay 5.45 billion yuan (US$710.62 billion) for shares of China Minsheng Banking Corp. According to a signed agreement between the three parties, China Life and Ping An will each buy 714 million Minsheng shares for a respective stake of 4.93 percent.

China Life’s stake will be subject to a 26-month lock-up period, while Ping An’s stake is subject to a 12-month lock-up period, the companies said in separate statements.

Minsheng said in its statement that the China Banking Regulatory Commission finished checking its new shareholder qualifications.

Insiders said the purchase is a win-win situation for both sides.

Minsheng’s profit has grown 30 percent every year for the past six years, and buying shares directly from the bank provides a safer and cheaper investment for the insurance companies than investing in China’s volatile stock market.

China Life and Ping An paid 7.63 yuan per share, but if they bought Minsheng’s share directly from the market, they would have to pay around 11 yuan at current rates.

A highly placed manager at Minsheng, who asked not to be identified, said China Life and Ping An’s shareholder status will help Minsheng standardize its management.

China Life and Ping An will gain two seats on Minsheng board and will be able to vote on the bank’s business policy.

Meanwhile, Minsheng will benefit from having the country’s two largest insurers in its board, the manger said.

China started allowing insurers to purchase stakes in commercial banks in 2005, prompting Ping An and China Life to embark on buying sprees.

Last year, Ping An bought 89 percent of Shenzhen Commercial Bank and raised its stake in Shanghai Pudong Development Bank Co to 4.94 percent from 1.8 percent. HSBC Holdings Plc said in February that Ping An was buying its 27 percent stake in subsidiary Ping An Bank.

China Life last year bought 20 percent of Guangdong Development Bank for 5.67 billion yuan, getting access to 500 banking outlets to sell its insurance and investment products.

Minsheng said in March it was selling shares to seven corporate investors, including China Life and Ping An.

China Life’s 2006 profit more than doubled on investment gains from the country’s booming stocks, providing the insurer with capital to expand into other financial services. Ping An’s profit almost doubled in 2006.

Bloomberg contributed to the story

 

Chinese stocks surge 3.03%

After yesterday’s quick shifts in corrections, Chinese stocks formed a clear upward trend today. The Shanghai Composite Index surged 114.49 points or 3.03 percent to 3,890.80 by the closing of the day. Opening higher from 3,787.70, the index climbed up in waves with a few setbacks, none of which was deep enough to reverse the trend.

The index hit the lowest point at 3,779.5 in a dive right after the opening. But then turned around and started escalating. The hike accelerated in the last half an hour, with the benchmark index hitting the highest point at 3891.40 just before the closing. For the whole day, it was always running above yesterday’s closing level.

Shanghai Composite Index
Source: www.stockstar.com

Total turnover of the stocks enclosed by the major indices was 269.7 billion yuan, larger than that of yesterday.

At the Shanghai bourse, as many as 754 stocks saw their prices rise, while merely 45 fell and 49 ended flat. Shanghai Shenhua Holdings rose 10.07 percent to 7.98 yuan as the top gainer. Xinjiang Friendship Group and Tianjin Quanye Bazaar Group were also sealed at the maximum rising cap of 10 percent. Jiangsu Sanfangxiang Industry, however, dropped 10.03 percent as the biggest loser.

China Unicom, with the largest trading volume, rose 0.07 yuan, and Sinopec, with the largest transaction value surged 4 percent to 14.82 yuan.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, closed at 12,696.01, up 357.82 points or 2.9 percent. Finishing at the daily highest point, it had 12,357.56 soon after the opening as the bottom level.

Shenzhen Component Index
Source: www.stockstar.com

Of its A shares, 509 went up, 33 down and 69 unchanged. Northeast Electric Development was on top of the gainer’s list while Lanzhou Sanmao Industry fell most. TCL and China Vanke, ranking on top in terms of trading volume and transaction value respectively, both had modest growth in share prices.

Stocks in the media, construction and pharmaceutical industries performed well. Beijing Gehua CATV Network climbed 3.08 percent to pioneer the construction sector.

B shares were up. Of the 109 B shares listed on the two exchanges, 71 rose and seven ended flat. Hainan Pearl River Holdings was again sealed at the maximum cap of 10 percent to 4.57 yuan. Closed-end funds listed on the exchanges were also strong.

Analysts believe price correction is inevitable, even if there were no such a stamp tax hike. Bubbles in deed existed in the stock market. The latest data showed that in May there had been 29 stocks with price to earnings (P/E) ratios higher than 1,000 in the Shenzhen bourse, compared with only three stocks in January.

Chongqing Yukaifa and Yantai Dongfang Electronics Information Industry had P/E ratios at 8,000, followed by ST Anhui Feicai Vehicle with P/E ratio of 3,850. Five stocks had P/E ratios between 2,000 and 3,000 and the rest 21 between 1,000 and 2,000.

Many investors fear China may impose a capital gains tax to cool an “overheated” stock market. But legal experts think it is impossible that such a tax will be issued overnight like the stamp tax hike, according to the Shanghai Securities News.

“Based on the State Council’s 1988 Provisional Rules for Stamp Tax, adjustment in the stamp tax rate may be decided by relevant government bodies,” said a source. “But the capital gains tax is a completely new tax. There are no legal grounds for it now. It needs to go through a full procedure of legislation before it is for approval by the taxation authority.”

The National Council for Social Security Fund is considering requiring State-owned enterprises to pay dividends from profits to the Social Security Fund (SSF), according to Gao Xiqing, vice chairman of the council. Gao added that SFF believes China’s stock market has a good prospect and will set aside a large portion of the fund for equity investment.

Central bank vice governor Wu Xiaoling said on the sidelines of a financial forum held in Tianjin yesterday that the recent turmoil in the stock market is not detrimental enough to affect the Chinese economy.

Wu stressed the importance of a stable and healthy capital market to the country’s economic growth. All the central government did were for the long-term development of the market, she said. Investors should build up or recollect their confidence in the economy and the stock market. They should also understand the goodwill by the regulators and improve abilities of risk assessment and control, she added.

Wu also suggested allowing financial institutions to get involved in private equity business. The Partnership Enterprise Law to be enacted this month will introduce partnership into the formation of companies in China and pave the way for commercial banks, insurers, pension funds and other financial companies to participate in private equity investment funds. The supervisor should amend the current laws and regulations accordingly to facilitate the involvement of financial institutions in such businesses, said Wu.

 

Stock tumble won’t affect bullish performance in the long run, expert

Chinanews, Beijing, June 6 – Faced with the big market tumble, a reporter from the China Securities Journal recently interviewed a group of financial experts. All of them believe that the recent stock tumble is only temporary and it won’t affect the stock market’s bullish performance in the long run.

The financial experts suggest investors not to sell their shares at this time. Hua Sheng, the principal of the Yanjing Overseas Students University said that Chinese stock market was generally good and the recent tumble was caused by the overheated performance in the stock market. In the long run, he said, such tumble won’t affect the bullish performance of Chinese stock market fundamentally.

The big tumble was in part caused by some new investors who, seeing the drop in the market, sold out their shares and therefore made the market drop even deeper. After a period of time, it is expected that the stock market will regain momentum to climb in future, he said. Wu Xiaoqiu, director of the Renmin University of China’s Finance and Securities Research Institute said that on the whole, Chinese stock market was generally good.

 However, there are some structural problems for the time being, according to him. The number of Chinese stock account holders now has topped 100 million. In regard to this problem, he said, there is no need to make a fuss about it. As Chinese economy develops, it is quite natural for people to make some changes in their finance assets.

In future, securities assets will tend to make up a larger share in Chinese people’s total assets structure, which, in the end, will indicate that Chinese public have accepted new financial ideas. At present, 80% of the American people’s financial assets are shares. In Japan, such ratio has also reached 40-50%. In China, however, related ratio is only 15%, Wu said. Li Zhenning, board director at Shanghai Rising Fund Management, said that right now, some international investment companies had failed to make an objective judgement of Chinese stock market.

On the one hand, he said, they think that Chinese stock market contains big bubbles, while on the other, they constantly ask China to raise the QFII investing quota. Their assertions and behaviors seem to be conflicting. Whatever their motives, one thing is clear: the rising stock prices will surely raise their buying costs, he said.

Through acquisition and merging activities and overall listing, the quality of many listed companies has been greatly improved. At present, many banks and resource companies, that are considered as industrial leaders in their respective sector, have all gone public. Last year, the profits made by Chinese listed companies increased by 40%.

 During the first quarter of this year, their profits further rose by 70%. Since the profit-making capability of Chinese listed companies has been improving, it might not be appropriate to judge the stock market’s investing value simply by its existing P/E Ratio and market price-net assets ratio. In fact, the resource value of domestic listed companies is far above their current market capitalization value. The current market level is not as high as some people claim, Li noted.

 

Stock markets report 5% capitalization loss

bChina’s two stock exchanges in Shanghai and Shenzhen shrank by five percent in terms of capitalization last week to 17.21 trillion yuan on Friday, down by 918.8 billion yuan from May 25.

The shrinkage was considered to be the result of the Ministry of Finance announcement late on Tuesday that the stamp tax on securities trading was to rise from 0.1 percent to 0.3 percent from May 30.

Shanghai Stock Exchange reported 13.34 trillion yuan in total capitalization, a drop of 4 percent, while Shenzhen Stock Exchange dropped by 8.4 percent to 3.87 trillion yuan.

The benchmark Shanghai Composite Index, which tracks both yuan-denominated A shares and hard currency B shares, closed at 4,000.74 points on Friday, down by 4.2 percent from the close a week earlier.

The smaller Shenzhen Component Index closed at 12,432.7 points, down 1.96 percent.

Shanghai Stock Exchange has 849 listed companies with 893 share types. Of the 1.13 trillion shares issued at Shanghai, only 262.1 billion are tradable. Shenzhen has 604 listed companies with 646 stocks. Of 254 billion shares floated at Shenzhen, only 132 billion are tradable.

 

Chinese stocks fall amid worries

Chinese stocks fell Friday amid worries about the government’s potential further moves to cool the equity market following a stamp tax hike.

The benchmark Shanghai Composite Index lost 2.65 percent to close at 4,000.74 points. The Shanghai and Shenzhen 300 Index fell 3.16 percent to 3,803.95.

Only about 150 out of more than 1,400 stocks in the Shanghai and Shenzhen stock exchanges posted gains, while more than 600 shares nosedived to their daily limit of 10 percent.

Sinopec proved an unusual bright spot after rising 2.15 percent to close at 15.17 yuan, the third straight increase after the duty hike.

Some other blue chip stocks performed well, offsetting part of the downward pressure on the benchmark index. Chalco, the country’s top aluminum producer, rose 4.48 percent to 21.92 yuan. China Merchants Bank gained 1.61 percent to 22.07, while China Life was up 0.22 percent to 37.08 yuan.

Brokerage shares recovered from two days of consecutive sharp losses. CITIC Securities increased 3.16 percent to 55.79 yuan, as Hong Yuan Securities edged up 0.36 percent to 31.6 yuan.

The decline was largely attributed to market fears about further dampening measures. Tuesday night the Ministry of Finance tripled the stamp tax on stock trading, prompting a 6.5 percent plummet in the Shanghai Composite Index.

China’s stock market is growing too fast and regulators hope they can develop it in a more stable way, said central bank vice governor Wu Xiaoling on Thursday.

“If the stock market can’t operate smoothly, then investors’ confidence will be hurt and their consumption will be affected, ” Wu said.

The duty hike and Wednesday’s drop do not seem to affect investors’ enthusiasm. More than 420,000 share trading accounts were opened on Wednesday, including 343,000 ones for yuan-denominated A-shares.

Xia Bin of the Development Research Center under the State Council expect regulators to come up with more macro control measures.

He suggested regulators focus on the supervision of listed firms and crack down on insider trading and other illegal manipulating activities, as well as increase the supply of quality stocks and other financial products.

Xia also advocated the abolition of tax on interest accrued from deposits as an effort to discourage the transfer of bank deposits to the equity market. But a State Administration of Taxation official said Wednesday China has no plans to abolish the interest tax in the near future.

 

Stock index futures licenses to be issued in July

China will issue the first batch of licenses to financial institutions involved in stock index futures businesses in July, according to Guangzhou Daily.

“There is still no specific timetable for the launch of stock index futures, but it will definitely be launched this year,” said a source close to the China Securities Regulatory Commission (CSRC).

Addressing a financial summit during the 10th China Beijing International High-tech Expo, Fan Fuchun, vice chairman of CSRC, said preparation work is still underway for the China Financial Futures Exchange. When that is completed, the stock index futures will be launched.

Although dozens of futures companies and financial institutions have submitted the applications for the licenses, only 10 general clearing participants (GCP) are under approval.

Currently, the regulator has not issued financial futures licenses or broker (IB) business qualifications.

The handful of GCPs is a problem if the first batch of licenses is issued in July, said the source close with CSRC. He estimated the total number of GCPs should be 40.

Some earlier media reports said the regulators would try to launch the stock index futures in the first half of this year. But officials at the futures exchange said they would start training staff this month until the end of June. Companies which have completed the training and have been awarded licenses will be qualified to buy and sell stock index futures, meaning the launch of the futures will be sometime in the second half of this year.