Overseas institutional and individual investors reduced their holding of onshore Chinese stocks to Rmb1.89tr by the end of March from Rmb2.1tr a month earlier, according to data published by the People’s Bank of China (PBoC) on Tuesday. Their exposure to domestic bonds declined slightly to Rmb2.32tr from Rmb2.34tr.
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Chinese state-owned enterprises (SOEs) recorded an 11.7% year-on-year revenue drop in the first quarter this year, the Ministry of Finance said in a Wednesday statement. SOEs earned Rmb12.3tr in revenue.
SOEs owned by the central government suffered a 10% year-on-year revenue decline, while those owned by local governments saw a sharper revenue drop of 14.1%. There are signs of recovery, however. Chinese SOEs’ March income was 48.4% higher than in February.
The companies recorded a total profit of Rmb329.1bn in the first quarter, a 59.7% decrease year-on-year. Central SOEs again fared better than local SOEs, with profit falls of 49.1% versus 86.3%, respectively. But the total profit in March was 4.2 times that in February.
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The China Banking and Insurance Regulatory Commission expects some increase in Chinese banks’ non-performing loan ratios in the second quarter. In the first three months of 2020, NPL ratios rose by 0.06 percentage points to 2.04%
But the second quarter increase will not be too big, and the risk is “totally controllable”, said a spokesperson for the regulator.
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The province of Hubei, once the epicentre of the Covid-19 pandemic, recorded GDP of Rmb637.9bn for the first quarter of 2020, 39.2% lower year-on-year.
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The PBoC cut the interest rate of its targeted medium-term lending facility (TMLF) on Friday, according to an official notice.
The TMLF is a tool first introduced in December 2018 to help small and medium enterprises (SMEs) secure funding from bigger banks. Banks receiving low-cost TMLF should use them to lend to small companies.
The central bank injected Rmb56.1bn of TMLF on Friday, versus Rmb267.4bn of maturing TMLF.
The Friday TMLF has a term of one year and an interest rate of 2.95%, 20bp lower than the previous level of 3.15%.
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The PBoC conducted a Rmb5bn central bank bills swap (CBS) operation on Tuesday. The CBS programme was designed to boost liquidity for banks’ perpetual bonds. Primary dealers in the interbank bond market can swap the perpetual bonds they hold with the central bank for the more liquid PBoC bills.
The duration of the bills is three months. The coupon rate is 0.1%.
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Beleaguered conglomerate Anbang Insurance Group will sell its remaining 20.5% stake in Chengdu Rural Commercial Bank to two local state-owned enterprises, according to a Friday statement from the bank.
Earlier this month, the group already pledged to sell 35% of its stake in the bank to a local state-owned enterprise.
Anbang was taken over by the CBIRC in February 2018 due to the firm’s solvency issues. The takeover period lasted two years.
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The Chinese renminbi retained its position as the fifth most active currency for global payments in March, according to Swift’s monthly RMB tracker. The currency had a share of 1.85% for global payments by value.
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US-listed Chinese company Baidu has reported an alleged corruption case against a former vice president, Wei Fang. The firm’s professional ethics committee said Wei has been handed over to the police. Before he was made VP of finance in 2018, he was the finance director, according to the company.
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The chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, reportedly warned US investors against putting money into emerging market – especially Chinese – companies due to problems with disclosures.
Clayton also issued a separate statement on the SEC’s website, alongside three other SEC officials as well as chairman of the Public Company Accounting Oversight Board, William Duhnke. They wrote that in many emerging markets, including China, “there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to [US] domestic companies”.
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Crédit Agricole completed an onshore USD/CNY cross-currency swap (CCS) linked to the secured overnight financing rate (Sofr) with a major Chinese bank this week.
According to a press release from the French bank, it was the first Sofr-linked USD/CNY CCS transaction after international regulators introduced the benchmark reform.