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The week in review: CSRC adds ESG to listed company annual report disclosures, telecom giants lose delisting appeal

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By Addison Gong
10 May 2021

In this round-up, the China Securities Regulatory Commission plans to ask companies to include separate chapters for corporate governance as well as environmental and social responsibilities in their annual financial reports, and three Chinese telecommunications companies will be dropped from the New York Stock Exchange after an unsuccessful appeal.

China’s foreign exchange reserves jumped by $28.2bn in April to $3.198tr, according to the State Administration of Foreign Exchange (Safe).

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The country recorded a current account surplus of Rmb487.1bn for the first quarter of 2021, or $75.1bn in dollar terms, Safe data showed.

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In April, foreign investors increased their holding of onshore Chinese bonds by Rmb64.87bn to Rmb3.22tr, according to data released by the China Central Depository & Clearing Co on Monday.

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The China Banking and Insurance Regulatory Commission (CBIRC) has published new rules requiring financial companies in China to apply for relevant business licences.

Banks, including policy banks, and other financial firms such as financial asset management companies, trust companies, financial leasing firms, auto loan finance companies, consumer finance companies and banks’ wealth management arms must apply for a ‘financial licence’. An ‘insurance licence’ is required for insurance companies and insurance asset managers. Insurance brokers must also be licensed.

Newly approved firms must apply for the required licences within 10 business days from their approval date. The rules are effective from July 1.

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The China Securities Regulatory Commission (CSRC) is taking public feedback for revised rules for the content and format of annual and semi-annual reports by listed companies.

One of the key changes is for companies to have a dedicated chapter on corporate governance, as the related information is currently scattered across different chapters. The regulator also added a chapter on environmental and social responsibilities, requiring listed firms to provide information on any environment-related penalties they received while encouraging them to make carbon-emission reduction related disclosure.

In addition, more information on changes in shareholding structure and outstanding bonds is required under the new rules. Companies should provide information on not only CSRC-regulated ‘company bonds’, but also other types of bonds such as enterprise bonds and debt financing instruments issued in the interbank market. They also need to provide details on the maturities within one year and repayment arrangements.

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The CSRC has reportedly denied that it is planning to tighten Chinese companies’ IPOs in Hong Kong and the overseas markets, during a Q&A at a Friday press conference.

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China Mobile, China Telecom Corp and China Unicom will be removed from the New York Stock Exchange, they said in separate stock exchange filings last Friday. The announcements came after the companies made official requests on January 21 to the bourse to review its delisting decision of their respective American depositary receipts.

The Chinese telecom trio expect the NYSE to give public notice of its decision. The delisting will be effective 10 days after the NYSE files a Form 25 with the US Securities and Exchange Commission, they added in the filings.

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Car sale in China is expected to drop 13.9% month-on-month in April to 2.17m vehicles, according to the China Association of Automobile Manufactures (CAAM). On an annual basis, sales likely increased 5%.

According to the CAAM’s estimation, for the first four months combined, car sales are up 50.3%, compared to the same period in 2020.

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The Hong Kong Monetary Authority is finalising details with its Macau counterpart and the People’s Bank of China on the Wealth Management Connect scheme, Hong Kong’s financial secretary Paul Chan reportedly said at a forum on Friday. He also expects the southbound trading of Bond Connect to be launched soon.

By Addison Gong
10 May 2021