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China market round-up: industrial profits drop, China green bond data to show on Lux exchange, eight more IPO candidates for Shanghai tech board

Profit 230x150
By GlobalCapital
29 Mar 2019

In this round-up: January-February industrial profits plummet, Luxembourg Stock Exchange agrees to post China domestic green bond data, Shanghai tech board waves through eight more

Industrial profits data, which measures the profits of industrial companies with annual revenues above Rmb20m ($3m), in January and February reached Rmb708bn, a 14% YoY decline. 

The National Statistics Bureau attributed the sharp decline to the Chinese New Year holidays and falling profits in the automobile, petroleum processing, steel and chemical industries.

State-owned enterprises experienced a 24% YoY drop in profit growth for the period of January and February. Profit growth of foreign enterprises also slowed to minus 14.5% from 1.9% in December. Private enterprise profit growth fell to minus 5.8% from 11.9% in December.

“The weak profit data represents further evidence of weakening growth momentum,” Ting Lu, China economist at Nomura, said on Wednesday. “[…] For industrial profit growth, we view a short-lived rebound as likely in March due to last year’s low base, but the downcycle should resume in April and May as the economy slows.”

Maggie Wei, China economist at Goldman Sachs, had a slightly more optimistic view.

“Looking ahead, industrial profit growth may stay soft this year,” she wrote. “Although in March, the base effect could be more favourable and help with a better year-over-year industrial profit growth. The VAT cut effective April 1 this year may also help with profit growth, especially for manufacturing enterprises.”

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Li Keqiang, Chinese premier, delivered a speech at the Boao Forum for Asia Annual Conference on Thursday morning.

His speech focused on managing the slowing economic growth and pledging to open up more of the Chinese market.

Li promised to cut the real interest rate levels, lower financing costs, formulate more detailed rules in support of the newly adopted foreign investment law, and shorten the negative list for foreign investments by the end of June. 

A few sectors were singled for more foreign investment: telecommunications, healthcare, education, transport, infrastructure and energy.

On Wednesday, on the sidelines at the Boao forum, Shenzhen Stock Exchange, Shanghai Clearing House, and the Shanghai Stock Exchange all signed agreements with the Luxembourg Stock Exchange to launch an information platform on the European bourse’s website to showcase Chinese domestic green fixed income products.

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Shanghai tech board committee processed eight more companies’ listing applications. So far, a total of 17 candidates’ application have been processed.

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In February, Chinese banks boasted a total of Rmb266tr of assets, a 7.1% YoY growth,according to data published by the China Banking and Insurance Regulatory Commission on Monday. 

Total assets of commercial banks reached Rmb218tr, taking up 81.9% of total assets. That was an 8.1% increase YoY. 

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The renminbi retained its place as the fifth most used payment currency worldwide in February, according to Swift’s monthly RMB tracker, published on Wednesday.

The Chinese currency had a share of 1.85% in global payments by value, above the Canadian dollar's 1.75% market share, but a decrease from December’s 2.15%.

Hong Kong still maintained its position as the largest offshore RMB clearing centre, accounting for 75.96% of all RMB payments outside China.

The UK ranked first in terms of the venue for FX transactions by value, accounting for 40.03% of total FX transaction, up from 36.68% in January.


By GlobalCapital
29 Mar 2019