ICBC’s wholly-owned subsidiary, ICBC Financial Assets Investment Co, took a 10.82% stake in Bank of Jinzhou worth approximately Rmb3bn ($435.5m), according to a Sunday announcement from the Chinese state-owned bank.
Previously, local regulators in Liaoning province, where Bank of Jinzhou is based, met financial institutions to deal with the bank’s liquidity problems, Reuters reported.
Bank of Jinzhou is listed in Hong Kong. But its shares have been suspended since April after it failed to publish its 2018 annual report following the resignation of its auditor.
ICBC’s support for Bank of Jinzhou is only the latest example of Chinese government-backed firms swooping in to save their troubled peers. In May, the PBoC and the China Banking and Insurance Regulatory Commission (CBIRC) took control of beleaguered Baoshang Bank. They tasked China Construction Bank with running Baoshang during the takeover period.
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The Stock Exchange of Hong Kong, the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) have agreed to include companies listed on both the Star board and the Hong Kong stock exchange in the Stock Connect scheme. The three regulators announced the move last Friday.
At the moment, only companies with both A and H shares, with the former trading on China’s main boards, and the constituent stocks of some selected SSE and SZSE indexes are eligible for trading through the Stock Connect scheme. There is so far only one stock listed both on the Star board and in Hong Kong, train control systems developer China Railway Signal and Communication.
“SSE’s new Star Market is different from its mainboard in terms of trading, regulations and investor eligibility,” according to the press release. “Accordingly, business and technical assessments, as well as other preparations, need to be completed before stocks listed on the Star market become available via Northbound trading of Stock Connect.”
A launch date will be announced in due course, the Hong Kong bourse said.
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The PBoC published a notice last Friday asking non-financial firms or individuals with businesses that involve at least two financial industries to be classified as financial holding companies. Once classified, these companies will need licences from the central bank to operate.
The rules will also require financial holding companies to hold certain levels of capital. Their ownership structures and source of funding will be examined by regulators.
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China’s industrial profit fell by 3.1% year-on-year in June, reversing the 1.1% year-on-year gain in May. For the first six months, the overall industrial profit fell by 2.4% year-on-year.
“Among the top five industries, car industry and computer and communication equipment industries are two drags with profits from those two industries [falling] by 24.90% year-over-year and 7.9% year-over-year,” Dongming Xie, head of Greater China research at OCBC Bank, wrote in a Monday note. “The fall of profit in the car industry reflected the weaker domestic demand while the decline of profit in computer and communication equipment was the result of US-China trade war.”
Goldman Sachs’ Maggie Wei, a China economist, expected the moderation in real activity growth to continue thanks to trade tensions and higher tariffs.
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The FX market in June recorded a total trading volume of Rmb15tr, roughly Rmb2.6tr lower than the previous month, according to a monthly report by the State Administration of Foreign Exchange. The trading volume between banks and clients reached Rmb2.26tr and that between just banks hit Rmb12.78tr, according to data published on Friday.