China’s securities regulator launches “unprecedented” measures to rescue stock market

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China’s top economic and financial news stories as of 8 February, 2024

China’s securities regulator sends key signals to market following sustained losses (Securities Daily)

Following declines over the last three trading days of January, the A-share market staged another irrational drop in the first three trading days of February. 

At this critical moment, the China Securities Regulatory Commission (CSRC) resorted to momentous measures: in three days from 4 – 6 February it made 10 key announcements – an extremely rare phenomenon. 

CSRC has called for strengthening the supervision of the securities lending business, severely punishing malicious short-selling by manipulating the market, preventing stock pledge risks, guiding various institutions to enter the market with greater intensity, optimizing the supervisory mechanism for mergers, acquisitions and restructurings, and improving the investment value of listed companies.

The series of measures launched by CSRC is of unprecedented vigour and intensity, and were welcomed by the market. They are of great significance to further invigourating the market and boosting market confidence.

January CPI falls 0.8% YoY, pork prices drop 17.3% (Sina

Data released on 8 February by the National Bureau of Statistics (NBS) indicates that in January 2024 household consumption continued to increase due to the holiday effect, with national consumer prices rising by 0.3% in month-on-month (MoM) terms. 

This marks the second consecutive month of increase, with an acceleration of 0.2 percentage points from the previous month. 

Urban prices increased by 0.3% and in rural areas they increased by 0.2%. Food prices increased by 0.4% and non-food prices increased by 0.2%, while consumer goods prices increased by 0.2% and service prices increased by 0.4%.

Impacted by the high base of the Spring Festival in the same month last year, in January national consumer prices fell by 0.8% in year-on-year (YoY) terms. 

Urban prices fell by 0.8% and rural prices also declined by 0.8%. Food prices dropped by 5.9% and non-food prices increased by 0.4%. Consumer goods prices dropped by 1.7% and service prices increased by 0.5%. 

Additional 1 trillion yuan in treasury bonds issued in 2023 (Xinhua)

On 7 February, the National Development and Reform Commission (NDRC) announced that it had recently consulted with relevant departments on releasing the list of the third batch of projects for the issuance of additional treasury bonds in 2023. 

Following the announcement of the third batch of projects, all projects for the issuance of an additional one trillion yuan in treasury bonds have been fully disclosed. 

According to reports, the third batch involves more than 2,800 projects for the allocation of nearly 200 billion yuan in government bond funds. 

It mainly includes post-disaster recovery and reconstruction in northern China with a focus on the Beijing-Tianjin-Hebei region; the improvement of disaster prevention and reduction capabilities, as well as the improvement of natural disaster emergency response capabilities.

Chinese vehicle production and sales figures climb steadily YoY in January (Xinhua

Data released by the China Association of Automobile Manufacturers on 8 February indicates that in January 2024 China’s automobile production and sales numbers reached 2.41 million and 2.439 million units respectively, for year-on-year (YoY) rises of 51.2% and 47.9%.

China’s clean energy vehicle production and sales reached 787,000 and 729,000 respectively, for month-on-month (MoM) declines of 32.9% and 38.8% and YoY gains of 85.3% and 78.8%.

China exported 443,000 cars in January, for a MoM decrease of 11.2% and a YoY rise of 47.4%. Automobile exports continued to grow rapidly.

Alibaba continues to shed weight, will focus on core e-commerce and cloud operations (Cailianshe

During an earnings conference call, Alibaba Group Chairman Tsai Chongxin said with regard to the issue of “selling non-core assets” that Alibaba has completed the offloading of US$1.7 billion in non-core assets in 9 months. It is actively looking at the withdrawal listed stocks and has set up a dedicated team. 

“At present, Alibaba still has some traditional physical retail businesses on its balance sheet. They are not its core focus business, and it is reasonable for Alibaba to make an exit. However, considering the current market conditions, an exit may take time to achieve.”

In Q3 2023, Alibaba achieved revenue of 260.348 billion yuan, for a year-on-year (YoY) increase of 5%. Operating profit in the same period was 22.511 billion yuan, for a Yoy decline of 36%, mainly due to the impairment of intangible assets of Sun Art Retail and a goodwill impairment for Youku.

Excluding equity incentives and the aforementioned impairments, Alibaba’s adjusted EBITA was 52.843 billion yuan, for a YoY increase of 2%.

Multiple banks set to announce new round of deposit rate reductions (National Business Daily) 

On 7 February, a number of banks announced that they are about to usher in a new round of deposit interest rate cuts. 

Shengjing Bank will lower its term deposit interest rates on 8 February, and Xiamen International Bank will also reduce some term deposit interest rates following the Spring Festival. 

Against the background of continued pressure on the net interest margins of banks, the trend has been for deposit interest rates to enter a downward channel.

Shenzhen loosens home purchase restrictions, allows non-registered households to own homes (CCTV

The Shenzhen Municipal Housing and Construction Bureau has cancelled the requirements for the number of years of residence and the number of years for the payment of personal income tax and social insurance to qualify for home purchases. 

Households and single adults (including divorcees) who are not registered residents of Shenzhen and can provide proof of continuous payment of personal income tax or social insurance in Shenzhen in the three years before the date of purchase are now eligible for the purchase of one house.

Households with registered residence in Shenzhen (including households with some family members who are registered residents in Shenzhen) are limited to the purchase of two houses, and single individuals with registered residence in Shenzhen (including divorcees) are limited to one. 

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