China’s Top Financial Headlines for the Week of 29 May – 2 June 2023

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A round-up of China’s top financial headline news stories from the week of 29 May – 2 June 2023.

China UnionPay overtakes Visa in the global debit card market for the first time

(中国银联全球借记卡市场首超Visa 

“According to the latest report released by Nielsen on 28 May, the transaction share of UnionPay debit cards surpassed Visa’s for the first time ever in 2022. 

“UnionPay’s share was 40.03%, while Visa’s was 38.78%. At the same time, from 2011 to 2021, Visa’s debit card transaction market share dropped from nearly 80% to 39.53%, while the transaction market share of China UnionPay’s payment system increased from almost zero to 38.68%. 

“In 2022, the Visa bank card transaction volume for the US payments system was USD$14.109 billion, while the China UnionPay payment system’s bank card transaction volume was USD$16.227 billion.”

China Construction Bank’s consumer finance subsidiary becomes 31st to grab approval for operation

(第31家!建信消金获批开业 中银、中邮消金之后大行旗下消金公司再添新成员

“Eight months after obtaining approval for development, CCB Consumer Finance has obtained approval to open for business. 

“On 1 June, China Construction Bank announced that it had obtained approval for CCB Consumer Finance to commence operation. This means another consumer finance company under the aegis of a major bank has joined the ranks of consumer finance companies. With the opening of CCB Consumer Finance, the number of consumer finance companies in China rises to 31.

“According to the approval, the registered capital of CCB Consumer Finance is 7.2 billion yuan, with company founders including China Construction Bank, Beijing State-owned Assets Management Co., Ltd. and Wangfujing Group. China Construction Bank holds an 83.33% equity stake in CCB Consumer Finance.

“For large banks, the business of consumer finance companies is more inclusive and can complement existing credit card and consumer operations. The expansion of consumer finance companies will help to intensify market competition. 

“Consumer finance companies need to give full play to the empowering role of fintech, better improve operational efficiency and risk control efficiency, and formulate differentiated strategies based on their own comparative advantages and resource endowments.”

More than 80% of China’s holding-period funds post negative returns

(超八成持有期基金收益告负 业绩首末更超150%)

“Data from Wind shows that out of the 708 active equity funds with a holding period in the market, the gap between the first and last performance since their establishment is close to 150 percentage points.

“Taking the 10 three-year holding period products that are about to expire successively this year as an example, some products have lost more than 30% so far. 

“Even shortly after the establishment of funds, subscribers are already ‘deeply locked up’, but waiting does not mean that capital will be returned. Oftentimes, products still lose money at the end of the holding period.”

17 banks subject to intensive scrutiny from institutional investors in May, tech innovation finance and dividends become key watchwords

(5月17家银行获机构密集调研 科创金融、分红成关键词 业内建议关注估值低、高ROE银行)

“Institutional investors are still enthusiastic about listed banks. Figures from Wind show that at the time of publication (1 June) a total of 17 A-share banks have been the subject of research by institutional investors in May, which is almost the same as the figure for the same period last year. 

“In addition, compared with the six banks in the previous month (the periodic report disclosure month), the number of banks surveyed in May increased significantly. Among them, Bank of Ningbo and Bank of Suzhou have been favoured by more than 50 institutions, attracting the attention of many institutions such as securities companies and funds.

“Annual loan issuance, tech innovation finance, and dividends are issues that institutions are concerned about. Recently, the performance of the secondary market for bank stocks has rebounded.”

Total assets of financial leasing companies hit 3.78 trillion yuan at the end of 2022: China Banking Association 

(银行消费信贷价格竞争加剧 年化利率“3字头”成常态)

“The China Banking Association recently released the ‘China Financial Leasing Industry Development Report (2022).’

“As of the end of 2022, the total assets of financial leasing companies reached 3.78 trillion yuan, for a year-on-year increase of 5.60%. The balance of lease assets was 3.64 trillion yuan, for a year-on-year increase of 9.27%, of which the balance of operating lease assets was 665.694 billion yuan, for a year-on-year increase of 20.16%. The balance of directly leased assets was 344.799 billion yuan, for a year-on-year increase of 15.04%.

Chinese central bank launches fifth central bank bill swap (CBS) for 2023 

(央行开展第五期央行票据互换(CBS):操作量50亿元 )

“On 29 May the People’s Bank of China (PBOC) announced via its official website the launch of the fifth central bank bill swap (CBS) operation in 2023, for the purpose of “improving market liquidity for bank perpetual bonds and supporting banks to issue perpetual bonds to replenish capital.”

“The total value of the CBS operation was 5 billion yuan, the term is 3 months, and the coupon rate is 2.35%. The valuation date is May 29, 2023, and the expiration date is August 29, 2023.”

Ministry of Industry and Information Technology drives accelerated green development of industry across six areas

(工信部推进六方面转型加快工业绿色发展)

“Xin Guobin, deputy-head of the Ministry of Industry and Information Technology, said at the 2023 Industrial Green Development Conference held in Guangzhou on 1 June that to break the constraints of resources and the environment, China must adhere to a new path of industrialization and promote the development of high-end, intelligent, and green manufacturing. 

“It is necessary to comprehensively drive the green development of industry and make green industrial development the focal point of a new form of industrialisation via transformation across six areas, including enhancements to the industrial structure, low-carbon energy consumption, circular usage of resources and clean production processes.”

Interbank certificate of deposit issuance volume falls month-on-month for third-consecutive month, rates fall to 2.4%

(5月份同业存单“量价齐跌”:发行额连续三个月环比下降 利率降至2.4%)

“According to data from Wind, the actual issuance of interbank certificates of deposit in May totalled 2.09186 trillion yuan, for a decrease of 115.27 billion yuan compaed to the previous month. 

“The monthly issuance volumes for interbank certificates of deposit in February, March, and April of this year were 2.48324 trillion yuan, 2.45362 trillion yuan, and 2.20713 trillion yuan respectively.

“Ming Ming, chief economist of CITIC Securities, said to a reporter from  Securities Daily that the decline in the issuance of interbank certificates of deposit was mainly due to supply-side impacts.

“To a certain extent, the impact of excess household savings still lingers, and the liabilities side of institutions still retains a large volume of deposits, leading to insufficient active demand for debt. 

“In addition, the interest rate center has fluctuated downwards since May, and loose market liquidity has improved institutional expectations while reducing the financing willingness of banks.”