The week in review: China's November exports jump, CBIRC fines BOC for loss-making product, Ant, Greenland secure SG digital banking licence
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The week in review: China's November exports jump, CBIRC fines BOC for loss-making product, Ant, Greenland secure SG digital banking licence

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In this round-up, China posts stronger-than-expected export data for November, the banking and insurance regulator fines Bank of China over ‘irregularities’ in a crude oil product, and an Ant Group unit and a Greenland-led consortium win digital banking licences.

China published the November trade data on Monday morning. Exports grew 14.9% year-on-year to Rmb1.8tr ($268.1bn), while imports dropped 0.8% to Rmb1.29tr. The trade surplus, Rmb507.1bn, was 92.6% higher than a year ago.

In dollar terms, exports jumped 21.1%, imports 4.5% and trade surplus 102.9%, compared to November 2019. The $75.4bn surplus beat consensus forecast and came above the $58.4bn recorded in October.

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The US House of Representatives last week passed the Holding Foreign Companies Accountable Act, which could result in the delisting of Chinese companies from the US stock exchanges.

The China Securities Regulatory Commission said in a Friday Q&A on its website that it “strongly opposes” the US’s practice to “politicise securities supervision”.

“Using these regulations to force Chinese companies to delist from the US securities market will cause serious damage to the interests of US and global investors,” the CSRC said. It said any disputes should be solved through dialogue between Chinese and US regulators, and that the “principle of mutual respect” should be followed.

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The president of the Insurance Association of China, Xing Wei, said at a conference on Sunday that he expects the premium income for the insurance sector for the 2016-2020 period to reach Rmb4.5tr. Over the last five years, insurance premiums in China saw an average 13% annual increase, with a 13% increase in total insurance assets, he added.

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The China Banking and Insurance Regulatory Commission has fined Bank of China Rmb50.5m over a crude oil futures product that caused billions of renminbi in losses for investors. Penalties have also been imposed on four senior bankers in BOC’s global markets department.

The bank earlier this year drew criticism for its handling of the product, called Yuan You Bao, after it decided to settle trades at negative prices following a plunge in the WTI crude oil price to historic lows in April.

The regulator cited BOC’s “irregular product management”, “imprudent risk management” and “incomplete internal controls” for the penalties. BOC said in a statement that it is “determined” to accept the CBIRC penalties and will implement measures to solve the relevant issues.

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The Securities Association of China has published guidelines for IPO sponsors. Chinese securities houses are required to come up with “clear and reasonable” ways to price their sponsorship businesses, provide better pre-IPO tutorial services, and strengthen due diligence and other compliance work regarding anti-money laundering, inside information and conflicts of interest.

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The Shanghai Stock Exchange (SSE) has published the 2020 edition of guidelines regarding listing approvals in the Star market.

The document incorporated changes to adhere to China’s new securities law which was implemented earlier this year. Among other things, the SSE said the IPO registration process — from its acceptance of listing application to the listing committee’s approval and the CSRC registration — shall not take longer than three months. IPO candidates can also apply for an extension of the valid period of the financial data included in the IPO prospectus, usually valid for six months, by another three months.

The Shanghai bourse additionally made revisions about rules governing the Star board’s listing committee, boosting the size of the committee to 60 people. Any suspension in the IPO approval process will be no longer than two months, the new rules said.

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The SSE has added Hong Kong-listed Bohai Bank, Ming Yuan Cloud Group Holdings and Archosaur Games to the list of securities eligible for trading under the Shanghai-Hong Kong Stock Connect.

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The National Association of Financial Market Institutional Investors (Nafmii) published new due diligence guidelines for lead underwriters of corporate bonds in the interbank market. The document covers the definition of due diligence, working requirements, due diligence methods and reports.

Compared to the old guidelines released in 2008, Nafmii specified nine areas where due diligence must be completed, such as bond terms, the use of proceeds, operational and financial data, major risks, credit ratings and credit enhancement. The regulator also set specific requirements on the content of due diligence reports and working reports. The lead underwriters have been told to keep the reports for at least five years after the bonds mature. A new chapter was also included on self-regulatory management at the underwriters and the potential penalties for failing to do proper due diligence.

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Earlier this year, the People’s Bank of China said it plans to develop a new benchmark interest rate, the depository-institutions repo rate (DR), to price floating rate bonds and other products such as interest rate swaps and negotiable certificates of deposit (NCDs).

On Friday, the Export-Import Bank of China priced a Rmb3bn six-month floating rate bond linked to the new reference rate, the first DR-based bonds in China, after an auction. The notes were priced at 2.6%, or 44bp over seven-day DR, after a 7.19 times covered order book.

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China also completed the first cash tender offer for a corporate bond in the interbank market last Friday. Xinzheng New Area Development Investment Co, a local government financing vehicle in Zhengzhou city, cancelled a Rmb1.5bn 5.4% private placement note (PPN) that originally falls due next March following a successful tender.

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Bondholders gave their go-ahead for Yongcheng Coal and Electricity Group Co to partially extend two more bonds: a Rmb1bn 4.35% 270-day bond and a Rmb1bn 4.38% 210-day note. Both deals became due in late November, but Yongcheng Coal has so far only managed to pay the interest. Investors have now agreed for the defaulted state-owned issuer to repay half of the principal on each bond, and extend the other half by 270 days, according to filings.

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The financial regulators of the Mainland and the Macau Special Administrative Region are working to launch a cross-border insurance services centre in Hengqing, Zhuhai. This is to better serve onshore customers that have bought into insurance products in Hong Kong and Macau, a government official in Hengqin said in a public event on Sunday.

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An entity wholly-owned by Ant Group and a consortium comprising Greenland Financial Holdings Group, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management have scored two of the four new digital banking licences in Singapore, the Monetary Authority of Singapore (MAS) announced last Friday.

The duo will hold licences called digital wholesale bank (DWB). A consortium comprising Grab Holding and Singapore Telecommunications, and Sea Ltd’s wholly-owned entity, were granted the digital full bank (DFB) licence.

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