PBoC stress tests bond exposure
The prospect of significant interest rate increases in the near term appears remote. Given the downward pressures on China’s economy, we expect rates will move gradually lower for the next few years…
Regulators go after shadow banking
As credit demand weakens, small financial institutions may resort to risky behavior to survive. Beijing wants to prevent that from happening…
NFRA issues new catalogues for financial leasing firms
The catalogues are part of Beijing’s broader strategy to clamp down on unsustainable financial practices and prevent further buildup of local government hidden debt. In recent years, tighter regulation of the financial leasing industry has shown promising progress, with direct-leasing steadily growing to represent a larger share of the total leasing volume…
Anbang Insurance begins bankruptcy proceedings following government-led restructuring
As Anbang Group enters bankruptcy proceedings, creditors may pursue legal claims and settlements from the company’s remaining assets. Meanwhile, the CISFC is likely to expedite efforts to divest its stake in Dajia Insurance Group, having completed its primary bailout mission…
PBoC committed to stable monetary policy
The PBoC has made monetary policy moderately more accommodative in recent months, most notably by cutting key interest rates in July. Nonetheless, those cuts have been too small to have a meaningful impact on the economy…
Premier Li tells officials to focus on consumption support
It’s unclear what specific measures Li envisions for boosting household incomes. The chances of the government handing checks directly to households are extremely low, suggesting that incomes won’t likely improve until the economy does…
SRC cracks down on securities firms
Strengthening oversight of securities firms is part of the CSRC’s campaign to restore public trust in capital markets by imposing discipline and improving corporate governance. Authorities hope that cracking down on bad behavior can build the foundations of a long-lasting, sustainable recovery in the stock market…
PBoC pricks the bond bubble
Despite these measures, the core issue remains structural. With a permanent slowdown in credit demand, banks will pile into the bond market for the foreseeable future…
PBoC talks interest rate reform
The PBoC is putting in place the financial infrastructure that will allow it, much like the Fed, to guide the economy by controlling a single short-term interest rate. This shift will enhance the PBoC’s ability to manage liquidity and stabilize short-term borrowing costs, which will improve overall market predictability…
VCs rush to redeem shares
This situation could evolve into a bank run, as startups struggle with liquidity and investors are reluctant to be the last to absorb potential losses. To prevent significant damage to the startup ecosystem, Beijing will need to act soon…
Fang Xinghai retires from the CSRC
Replacing Fang with an enforcer reflects the government’s current priorities. While China remains committed to attracting foreign capital and financial firms to its capital markets, its primary focus has shifted toward enhancing corporate governance and restoring public trust…
China UnionPay and Shanghai Pudong Development Bank appoint new presidents
There were two major personnel changes in the financial sector last month. First, Guo Dayong, 49, recently assumed the role of deputy Party secretary at China UnionPay Company Ltd. (CUP)…
July foreign financial institution approvals and development
MAPFRE RE; BNP Paribas; AllianzGI
Banks cut deposit rates
Between the deposit rate cuts and regulators’ April crackdown on large deposit interest payments, banks’ NIMs should improve marginally in H2. Meanwhile, on January 1, 2025, the interest rate on existing home mortgages will reset to reflect changes in the five-year LPR during 2024…
PBoC cuts MLF rate
The MLF is officially transitioning from a policy rate to a market rate. In June, the PBoC announced that it would regulate the economy using one short-term rate only…
China’s central bank cuts key policy rate
The PBoC wants to influence the entire yield curve by adjusting a single short-term policy rate, much as the Fed does. Until recently, the PBoC used the MLF rate to guide long-term rates and nominally linked it to the LPRs…
Local government finances to shift onto sustainable footing
China’s financially overstretched local governments desperately need assistance. Instead of assuming direct responsibility for their debts, the central government is reducing their spending obligations and boosting their income. The fiscal restructuring also allows…
PBoC cuts key policy rate
The PBoC wants to influence the entire yield curve by adjusting a single short-term policy rate, much as the Fed does. Until recently, the PBoC used the MLF rate to guide long-term rates…
Wang Weidong appointed head of new financial sector graft buster
The creation of the CFDISWC indicates that the Party will maintain its high-pressure approach towards the financial sector, aiming to further institutionalize anti-corruption efforts. Wang Weidong, with his extensive inspection experience, is expected to…
Loan prime rates decline 10bps
The LPR reductions were a surprise, but they shouldn’t have been, as we’ve long argued that the PBoC is reluctant to cut lending rates without reducing bank funding costs first. The PBoC did exactly that in April when it…