The week in renminbi: dual-class shares join Stock Connect, IMF wants trade peace, securities firms to be rated on DCM business
In this round-up, the Shanghai Stock Exchange said it will allow onshore investors to buy Hong Kong-listed dual-class shares, the International Monetary Fund urged the US and China to reach a trade deal and the Mainland securities regulator published guidance on securities houses’ bond underwriting practices.
The SSE revised rules on Friday evening to allow Hong Kong-listed dual-class shares to be eligible for the Stock Connect scheme. Under the new rules, which will take effect on October 28, dual-class shares such as Xiaomi Corp and Meituan Dianping will be available to onshore investors.
Over the weekend, the International Monetary Fund urged the US and China to work towards a trade deal.
Kristalina Georgieva, managing director of the fund, estimated that if the tentative trade deal reached between the two countries last week is implemented, it would reduce the drag on the global economy from 0.8% to 0.6%.
The Securities Association of China published new guidelines on how it will score securities firms on their bond underwriting businesses, according to a Friday announcement. The first industry-wide rating will be done in 2020.
Each onshore securities firm with more than three years experience in bond underwriting will be rated based on five criteria: the number of people in the DCM team and their years of experience, the volume and number of bonds underwritten in the past years, how well the firm complies with industry rules, the quality of its risk control system, and how well it has supported “national-level strategies” such as the Belt and Road and green finance initiatives.
The rating will be conducted annually and will divide the companies into three levels. At this point, it remains unclear what penalties firms will face for placing in the bottom group, or whether those in the top group will get preferential treatment.
The results will be made public.
Two more bank executives have been placed under investigation in relation to the case of Liu Shiyu, the former head of the China Securities Regulatory Commission, Caixin reported, citing people familiar with the matter. Liu was put under investigation in May. In early October, he was found found guilty of a variety of offences, including making "inappropriate public comments" and helping relatives purchase properties illegally.
Leng Peidong, the former chief of Ping An Bank’s Shanghai branch, and Yang Hua, Leng’s predecessor at the bank, were also placed under investigation.
The Ministry of Finance released fiscal data for the first three quarters of the year.
Total revenues went up by 3.3% year-on-year. Revenues from tax decreased slightly by 0.4% while nontax revenues, mainly from dividends paid by state-owned enterprises, jumped by 29.2% year-on-year, according to an official statement.
Among the different types of tax revenues, domestic value-added tax revenue and corporate income tax revenue increased by 4.2% and 2.7% year-on-year. Personal income tax revenues decreased by 29.7%, following a program of income tax cuts.
Government spending outpaced revenue growth. Expenditure by the central government increased by 9.2% year-on-year while those by local governments grew 9.4%.
The Chinese government has been increasing spending the most in three areas: science and technology, social security and employment, and environmental protection.