4/21/2021 Financial News: CCP Stabilizes Raw Material Prices, Communist China’s Record Corn Imports

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1.CCP to Stabilize Rising Prices of Raw Materials

Huang Libin, a spokesperson for the Ministry of Industry and Information Technology, said on Tuesday that rising commodity prices driven by higher raw material costs have increased the cost pressure on downstream manufacturers and squeezed their profit margins. The government will take actions to stabilize raw material prices and strengthen market supervision. Huang also said that although the current commodity price increases have an impact on the manufacturing industry, this impact is generally manageable.

Since the beginning of this year, the prices of steel, non-ferrous metals, petrochemicals, and other raw materials have continued the upward trend. For example, in the first two months, the average price of imported iron ore and copper concentrates increased by 56.6% and 44% year over year. Brent crude oil futures and New York light crude oil futures both went up by about 20%. The growing output of household appliances such as air conditioners, refrigerators and washing machines, and machinery has outpaced increases in steel, copper and aluminium, further increasing downstream cost pressure.

2.Communist China’s Record Corn Imports Pushes Up Corn Futures

Communist China’s monthly corn imports surged in March 2021. As a result, there has been a dramatic reduction in USDA estimates of corn supplies in the US. According to USDA’s most recent World Agricultural Supply Demand Report (WASDE) dated April 9, 2021, it is estimated this season’s corn ending stocks will be almost 30 percent lower than last season’s levels. That is equivalent to a decline of 567 million bushel in US domestic corn inventories. Prices of the most active CBOT corn futures contracts are reaching the highest level in almost 8 years. The current corn price rally to multi-year highs may motivate farmers to plant more corn, which could eventually lead to increased supplies. US corn export sales commitments have been level for the past two weeks, indicating a slowdown in CCP purchases of US corn.

3.Communist China Promotes The Transforming Of Personal Savings into Pensions

(Economic Information Daily) – On the evening of the 20th, Xiao Yuanqi, vice chairman of the Communist China Banking and Insurance Regulatory Commission (CBIRC), said at the Boao Forum for Asia 2021 annual meeting that the third pillar of pension insurance is very important. However, the overall proportion of the third pillar is currently very low. He emphasized that a large amount of personal funds should be transformed into the third pillar of pension products.

Communist China’s pension system includes three pillars, namely basic pension (first pillar), voluntary occupational pension in the form of enterprise annuity (second pillar), and personal commercial pension (third pillar). The proportion of the third pillar currently is very low despite the high savings rate. There are now 80 trillion yuan in personal savings deposits and more than 20 trillion yuan in wealth management products. However, most of these savings and wealth management products are short-term products and lack the features of pension products. “At present, these large amounts of personal funds that do not have the characteristics of pensions should be transformed into long-term pension products, the third pillar of the pension system,” said Xiao.

4.CCP Central Bank to Require Transition Towards Green Finance

BOAO, China (Reuters) – Communist China will require financial institutions to transition towards green finance as early as possible, central bank governor Yi Gang said during the Boao Forum on Tuesday. The central bank will give incentives to financial institutions to support such transitions and will offer new financing tools for carbon emission cuts, Yi said. The central bank will also provide support for green finance through ratings of commercial banks, deposit insurance rates and macro prudential assessments. The government will continue allocating more green bonds in its foreign exchange reserve investments while limiting investments in high-pollution assets, Yi said. He added that the government will also expand financial sector opening and expand business scopes for foreign financial institutions.

5.Food-Delivery Platform Meituan Raises $10 Billion

Meituan, China’s leading food delivery platform, raised US$6.588 billion by selling additional shares at HK$273.25 (US$35.25) each, and sold about US$3 billion of convertible bonds. Roughly 300 institutions participated in Meituan’s offering, with the top 20 taking roughly 60% of the deal. Tencent, the largest social network operator in Communist China and the biggest shareholder of Meituan with a 20% stake, bought $400 million in Meituan shares. Meituan plans to invest the proceeds in the research and development of autonomous-delivery vehicles, drones delivery and other innovations, as well as for general corporate purposes.

Meituan reported a loss of 2.24 billion yuan ($344.8 million) but its revenue rose 35% to 37.9 billion yuan in the fourth quarter. The company’s continued heavy investment in its community group buying business, Meituan Select, will likely lead to continued losses in future quarters. Wang, Meituan’s chief executive, acknowledged that although community group buying was a drag on profits, it is a rare opportunity for the company’s growth.

6.Asian Stocks Fall as CCP Virus Worries Continue

As concerns about a resurgence of CCP virus cases in some countries cast doubt on global economic growth and demand for crude oil, Asian shares and US stock futures fell on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6%. Australian stocks fell 1.25% and shares in Communist China were down 0.46%. Stocks in Tokyo dropped 1.79% due to a new wave of CCP virus infections and possible lockdowns. S&P 500 e-mini stock futures also fell 0.18%. U.S. crude dropped 0.4% to $62.42 a barrel; Brent crude fell 0.26% to $66.40 per barrel.

“Renewed concerns about the global economic recovery weighed on commodity prices and commodity currencies. Many countries around the world, such as India and Brazil, set new records for infections and deaths,” analysts at Commonwealth Bank of Australia said in a research note. “As long as the virus persists, there is a risk virus mutants develop and spread to other countries.”

By 【Financial Team – Kate】
News Collection: Wendy, Kate
Proofreading: Tracy

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