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Monday December 11, 2017

Stock Indices (Friday)

Shanghai Composite Index

Shanghai B

Shenzhen Component Index

Shenzhen B

Last 335.35 Open 332.43 High 335.77 Low 332.32 Change 0.83%

Last 10,935.06 Open 10,789.17 High 10,964.79 Low 10,789.17 Change 1.24%

Last 1,137.56 Open 1,121.72 High 1,137.66 Low 1,121.48 Change 1.44%

Last 3,289.99 Open 3,264.48 High 3,297.13 Low 3,258.76 Change 0.55%

Chinese RMB

100 Hong Kong dollars 84.8100 U.S. dollars 662.18 100 Japanese yen 5.8498 100 Euros 779.41 100 British pounds 891.99100 Swiss francs 665.67 100 Canadian dollars 514.99 100 Australian dollars 497.25 100 Singapore dollars 489.85

Hong Kong dollar 7.8047 Japanese yen 113.39 Euro 0.8497 British pound 0.7471 Swiss franc 0.9925Canadian dollar 1.2841 Australian dollar 1.3320 Singapore dollar 1.3517

U.S. dollar

Exchange Rates (Sunday)

CHINA’S foreign exchange reserves rose for a 10th straight month in November, though slightly less than market expec-tations, as tight regulations and a strong yuan continued to dis-courage capital outfl ows.

Capital fl ight had been seen as a major risk for China at the start of the year, but a combination of tighter capital controls and a faltering U.S. dollar helped the yuan stage a strong turnaround, bolstering confi dence in the economy.

Reserves rose US$10 billion in November to US$3.119 tril-lion, compared with an increase of US$700 million in October, central bank data showed.

Economists polled had expected reserves to rise by US$11 billion to US$3.120 trillion.

It was the fi rst time that Chi-na’s reserves have climbed for 10 months in a row since June 2014, and brought its stockpile — the world’s largest — to the highest since October last year.

The State Administration of Foreign Exchange said the appre-ciation of non-U.S. dollar curren-cies and changes in asset prices were the main reasons behind the rise in forex reserves.

Valuation effects due to the dollar’s drop against major cur-rencies such as the euro and yen are also behind the rebound in China’s reserves. The dollar

tumbled 1.6 percent against major trading currencies in November.

The yuan has gained about 5 percent against the dollar this year, following a drop of 6.5 percent in 2016, its biggest annual drop since 1994.

China’s foreign exchange reserves dropped by nearly US$1 trillion from a peak of US$3.99 trillion in June 2014 to US$2.998 trillion in January this year as it sought to shore up the yuan and reduce capital outfl ows. But reserves have since climbed by US$121 billion.

A Reuters poll found that long positions on the yuan held by investors in Asia by end-Novem-ber rose to the highest since Sep-tember, as the dollar continues to falter in global markets. .

Some analysts believe more stability in the yuan and less pressure on outfl ows could prompt authorities to lighten their hand on the currency.

“It therefore seems like an opportune time for [China’s cen-tral bank] to take further baby steps toward the long-held goal of exchange rate liberalization, most likely starting with a widen-ing of the yuan trading band,” said Julian Evans-Pritchard, China economist at Capital Economics.

The slide in the yuan and foreign exchange reserves last year prompted China to restrict capital outfl ows. (SD-Agencies)

Forex reserves rise for 10th month

Apple futures launch set for Dec. 22Apple growers inspect the harvest at their orchard in Yiyuan, eastern China’s Shandong Province, in this fi le photo. China will start trading apple futures on the Zhengzhou Commodity Exchange on Dec. 22, the China Securities Regulatory Commission said Friday. The contract is expected to provide a new hedging tool for farmers, the regulator said. SD-Agencies

THE securities regulator has published a set of guidelines for companies applying to make initial public offerings (IPOs), in a bid to be more transparent.

The new guidelines, issued by the China Securities Regulatory Commission (CSRC) late Thurs-day, come as China is poised to approve a record number of IPOs in 2017, while also tightening its grip during the vetting process to ensure the quality of listed fi rms.

The CSRC clarifi ed the dead-line by which IPO applicants must respond to regulators’ queries and listed eight situa-tions in which the IPO vetting process would be suspended.

For example, suspension would be triggered if the applicant, its major shareholder, sponsor or underwriting lawyers were under any form of probe for misconduct, or if the IPO application confl icts with other type of securities the applicant is issuing.

China is accelerating IPO approvals as part of efforts to broaden direct fi nance and help companies reduce debt leverage.

During the fi rst 10 months of this year, the CSRC had approved 359 IPOs, exceeding the annual record of 347 in 2010, potentially making China’s IPO market one of the world’s biggest in 2017, the regulator said.

But the pace of approvals has been uneven, with the release of large batches at times hitting the country’s stock markets as investors worried about a fl ood of new supply.

To reduce applicants’ waiting period, the CSRC has shortened the vetting process this year, slashing the average approval time to about 15 months from over three years previously.

Meanwhile, the CSRC is getting less tolerant of sub-standard applicants. About 29 percent of IPO applications were rejected during the Janu-ary-October period, according to the regulator. (SD-Agencies)

IPO application process made more transparent

THE banking regulator has confi s-cated illegal income and imposed fi nes on China Guangfa Bank Co. totalling 722 million yuan (US$109 million) for providing illegal guarantees for defaulted corporate bonds sold through an Alibaba-backed online fi nance platform, it said Friday.

The fi ne, the biggest pen-alty ever handed down by China’s banking regulator, was equivalent to about 8 percent of Guangfa Bank’s 2016 profi t, according to calculations based on the bank’s annual report.

The high-yielding bonds were issued privately by southern Chi-

nese phone maker Cosun Group and sold through Zhao Cai Bao, an online platform run by Ant Finan-cial Services Group, the fi nance affi liate of e-commerce giant Alibaba Group Holding Ltd.

When the bonds defaulted in December last year, Ant Finan-cial asked Zheshang Property and Casualty Insurance Co., which wrote insurance policies on the bonds, to repay investors.

But the insurer released docu-ments carrying Guangfa Bank’s offi cial seals and said that the bank’s Huizhou branch had promised to guarantee its insur-ance policies for the bonds.

Guangfa Bank said at the time that the guarantee documents, offi cial seals and personal seals presented by the insurer of the bonds were “all fake” and that the bank had reported the matter to the police.

In Friday’s statement, the China Banking Regulatory Com-mission (CBRC) said the fraud, involving 12 billion yuan and more than 10 fi nancial institu-tions, was a “collusion” between employees at Guangfa Bank’s Huizhou branch and Cosun to conceal the bank’s huge amount of nonperforming assets and operational losses. (SD-Agencies)

FOREIGN investors increased their holdings of Chinese bonds for a ninth consecutive month in November, adding to positions in government bonds and some policy bank bonds as a domestic selloff led to a surge in yields.

Holdings of Chinese treasury bonds by overseas investors rose 14.4 billion yuan in October to 573.5 billion yuan (US$86.66 billion), according to calculations based on data from China Cen-tral Depository and Clearing Co. (CCDC), the country’s primary clearing house.

After reducing them in Octo-ber, offshore investors increased their holdings of Chinese policy bank bonds by 1.84 billion yuan

to 316.4 billion yuan. Total off-shore holdings of all Chinese bonds cleared by CCDC rose by 15.3 billion yuan in November to 936.6 billion yuan.

Following a surge since August, holdings by offshore institutions of negotiable certifi cates of deposit (NCD), a type of short-term debt popular among smaller banks, fell by 15.7 billion yuan in November to 139 billion yuan, separate data released by Shang-hai Clearing House showed.

Gary Ng, an economist at Natixis in Hong Kong, said the decline might reflect a maturity wall as NCDs come due. But he added that high yields would continue to make

them attractive to investors.Data from the website of the

China Foreign Exchange Trade System (CFETS) showed more than 2.2 trillion yuan in NCDs will come due in December, about 6 percent of the total value of all NCDs ever issued.

The yield on three-month AAA-rated NCDs was 4.9802 percent Friday.

Fears over the impact of a government campaign to reduce excessive fi nancial risk drove yields on government and policy bank bonds to their highest levels in three years in November, lifting yields across the domestic bond market.

(SD-Agencies)

Offshore buyers lift bond holdings for 9th month

Guangfa fi ned over guarantees for defaulted bonds