China market round up: Shanghai tech board opens for IPO applications, local government debt reaches new heights, fiscal deficit widens

In this round-up, Shanghai tech board has started accepting IPO applications, new issuance of local government bonds hits record, fiscal revenue growth slowed thanks to tax cuts

  • By Rebecca Feng
  • 22 Mar 2019
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The new Shanghai Tech Board has started to accept IPO applications, according to state media Xinhua.

Shanghai Stock Exchange has set up a dedicated webpage for the Tech Board. Information on those companies who have applied to list on the new board will be available to the public on the webpage. As of Friday, there was no information available under “companies applied to list.”

The exchange also published on Friday the list of candidates for the tech board IPO review panel and technology and innovations consultation committee.

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Outstanding local government debt reached Rmb19.1tr ($2.85tr) in February, with Rmb364.2bn of new issuance last month.

For the onshore bond market in general, the total volume of outstanding bonds had reached Rmb88tr by the end of February, with a Rmb2.4tr of new issuance in the month, according to central bank data.

Total trading volume in the interbank market totalled Rmb10.9tr in February with an average daily volume (ADV) of Rmb638.2bn, a 103.08% increase year-on-year (YoY). Trading volume in the exchange market reached Rmb470.6bn, with an ADV of Rmb31.4bn, a rise of 42.33% YoY.

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Total fiscal revenue for January and February reached Rmb3.51tr, a 7% growth YoY. Total government spending in the same period totalled Rmb3.81tr, a rise of 14.6% YoY, according to data released by the Ministry of Finance on Monday.

One reason that revenue is not keeping up with the expenditure is the Rmb2tr tax cut which went into effect on January 1. In the first two months, China’s individual income tax revenue dropped 18.1%.

Should the government keep spending more than it takes in, it will likely fail to keep the 2.8% fiscal deficit goal it set at the Two Sessions meeting a week ago, local media said.

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In February, Chinese banks bought Rmb699.7bn ($103.9bn) and sold and Rmb801.1bn in foreign exchange markets, according to State Administration of Foreign Exchange (Safe) data..

Those totals consisted of Rmb631.5bn bought and Rmb733.8bn sold for clients. Banks themselves bought Rmb68.2bn and sold Rmb67.3bn, according to the Safe data.

“Corporations and individuals saw relatively big surplus in their foreign exchange trading,” Wang Chunying, chief economist at Safe, said on Tuesday press release. “The average monthly surplus for non-bank participants reached $28.3bn in the first two months. As a comparison, in the second half of 2018, we saw around $10bn of deficit from these non-bank participants each month.”

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In January and February, Chinese investors invested a total of $15.7bn into 138 countries and 1,416 corporations abroad, the Ministry of Commerce said on Thursday.

New investment to Belt and Road countries totalled $2.3bn, a 7% YoY increase. The total value of signed contracts reached $12.2bn while completed contracts reached $9.6bn.

Investment mainly went to industries including real estate renting, commercial services, manufacturing, wholesale, and retail.

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Bank of China signed a memorandum of co-operation with State Bank of India on Wednesday. In the same week, Bank of China opened a branch in Mumbai.

  • By Rebecca Feng
  • 22 Mar 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 19.93
2 Industrial and Commercial Bank of China (ICBC) 13.40
3 China Merchants Securities Co 12.94
4 Agricultural Bank of China (ABC) 7.84
5 China Securities 6.54

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 07-Aug-19 Daimler Germany 5,000
2 31-Jul-19 Cassa Depositi e Prestiti SpA Italy 1,000
3 24-Jul-19 Semiconductor Manufacturing International Corp (SMIC) China 2,000
4 10-Jul-19 BMW Finance N.V. Germany 3,500
5 20-Jun-19 Maybank Malaysia 2,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 32.50
2 Credit Agricole 6.34
2 HSBC 6.34
4 Bank of China (Hong Kong) (BOCHK) 6.22
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.22

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-Jul-19 CIFI Holdings China 1,600
2 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
3 16-Apr-19 ICBC Singapore Branch China 1,000
4 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
5 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500