6/22/2021 Financial News: Debut Of Infrastructure Public REITs, CCP’s Further Crackdown On Crypto Transactions

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1.Debut of Infrastructure Public REITs in Communist China

Communist China’s first batch of publicly traded real estate investment trusts (REITs) started trading on Monday, with five on the Shanghai Stock Exchange and four on the Shenzhen Stock Exchange. The price change limit is 30 percent on the first day of listing and 10 percent after that.

These nine REITs are infrastructure-focused and are expected to generate new capital to support projects such as highways, storage and logistics, and sewage treatment. They can also provide additional liquidity to companies, said a report from Moody’s Investors Service. Infrastructure REITs allow companies to monetize their infrastructure assets and use the proceeds to finance projects or reduce debt. According to Bosera Asset Management, publicly traded REITs, as a fourth type of asset different from cash, stocks, and bonds, have relatively stable dividends, less price fluctuations compared with stocks, and weak correlation with other asset prices.

All the newly-listed REITs opened higher on Monday. As of the close of the trading day, the total turnover reached 1.86 billion yuan, which was 2.55% of the total turnover of 72.968 billion yuan in all listed fund transactions that day.

2.Chinese Central Bank’s Further Crackdown on Crypto Transactions

On Monday, CCP’s central bank announced that major financial institutions including Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank, and Alipay must stop facilitating crypto currency transactions. It emphasized that financial institutions must comprehensively investigate and identify virtual currency exchanges and and cut off the transaction payment link in a timely manner. It also required these institutions to improve the abnormal transaction monitoring model and strengthen their monitoring and detection capabilities. Subsequently, major banking institutions have issued statements agreeing to comply with these guidelines.

Upon the announcement, Bitcoin price once fell below $32,000, and closed about 10% down. Within 24 hours, more than 160,000 people lost 6.3 billion yuan in total. It is also worth mentioning that Communist China’s crackdown on cryptocurrency mining has extended to the southwestern region. The Sichuan Provincial Development and Reform Commission, and the Sichuan Energy Bureau issued a joint notice demanding the closure of suspected cryptocurrency mining projects by June 20.

3.Communis China’s Grain Imports Surged Over 140% in May

According to the data released by the General Administration of Customs, in May, 6.07 million tons of grains and grain flour were imported, a year-on-year increase of 143.9%; the cumulative imports of grains and grain flour from January to May were 27.11 million tons, a year-on-year increase of 190.5%.

Corn imports in May were 3.16 million tons, an increase of 395.3% from a year ago; cumulative imports in the first five months were 11.73 million tons, a year-on-year increase of 322.8%. In addition, 1.11 million tons of barley were imported in May, a year-on-year increase of 115.7%. The total imports from January to May were 4.65 million tons, 139.1% higher than a year ago. In terms of wheat, 0.79 million tons were imported in May, a year-on-year drop of 3%. Cumulative imports in the first five months reached 4.61 million tons and the year-on-year increase was 88.9%.

4.Export Containerized Freight Indices Hitting New Highs

Shipping prices keep climbing to record highs. On June 18, the Shanghai Shipping Exchange announced the latest Shanghai Export Containerized Freight Index (SCFI) reached a record high of 3,748.36 points, an increase of 44.43 points or 1.2% from the previous week. It surged 358% from the lowest level of 818 points in 2020. The China Export Containerized Freight Index (CCFI) also reached a record high of 2526.65 points, an increase of 84.08 points or 3.4% from the previous week.

In late June, the freight rate of a 20-foot standard container was about $6,800 from Shenzhen Yantian to Hamburg Port in Germany. The rate to Los Angeles Port ranged from $8,100 to $9,800, and the rate to New York Port exceeded $10,000. Communist China’s total exports in May were $263.92 billion, which increased 27.9% year-on-year but failed to meet the expected 31.9% increase.

5.IPOs Surged in Hong Kong and U.S. in First Half of 2021

The National Public Offering Group of Deloitte China recently released its analysis and forecasts for the Chinese Mainland and Hong Kong initial public offering (IPO) markets for the first half of 2021. The report shows that the U.S. IPO market has performed steadily with NASDAQ and the New York Stock Exchange the top two in global financing. The Hong Kong Stock Exchange ranked third, and the Shanghai Stock Exchange surpassed the London Stock Exchange to rank fourth. The world’s top ten IPO financing increased by 32% over the same period last year, half of which came from Hong Kong and Communist China.

In addition, the amount of Hong Kong IPO financing in the first half of 2021 hit a record high since 2011. Given the large number of companies planning dual-primary listings, secondary listings, and spin-off listings, it is estimated that 120 to 130 new stocks will be listed in Hong Kong in 2021 and may raise over HK$400 billion. Furthermore, Chinese companies have continued rushing into the U.S. IPO market in the first half of 2021. The number of new listings increased by 106% year-on-year, and the amount of proceeds raised went up by 213%.

6.Communist China’s Palm Oil Imports Soar

According to data released by the General Administration of Customs, Communist China imported 540,800 tons of palm oil in May, marking the third consecutive month of growth and reaching the second highest level in the past five years.

The total import volume from January to May was 2.483 million tons, up 23.5% over the same period last year. Among them, the import from Indonesia was 395,400 tons, a year-on-year increase of 52%, and a month-on-month increase of 0.6%. The import from Malaysia was 144,900 tons, a year-on-year decrease of 38%, and a month-on-month increase of 106%.

According to data released by the shipping survey agency ITS on Monday, Malaysia’s palm oil exports to India from June 1-20 were 207,600 tons, a decrease of 18.1% from the 253,500 tons in the same period last month. Its palm oil exports to the EU decreased 6.3% to 234,900 tons, setting a four-month low. But its exports to Communist China surged 24.8% from the previous month, reaching 146,500 tons and setting a new high in seven months.

7.Some Banks Stopped Issuing Second-Hand Housing Loans

The recent news that “many banks have tightened or even stopped issuing second-hand housing loans” has made many homebuyers nervous. A reporter from the Yangtze Evening News saw in the WeChat group of some buyers that an intermediary posted a screenshot that reads: “Chongqing Bank and Postal Savings Bank have stopped lending, and more banks will do the same”.

A source from the Shanghai Pudong Development Bank Nanjing Branch told reporters that as early as April this year, they had begun to tighten the real estate lending. In addition, mortgage interest rates have also been on the rise. Real estate loan interest rates in Shenzhen, Guangzhou, Hangzhou and other cities have shown signs of continued upward adjustments. In May, the national average interest rate on loans for the first home was 5.33%, and the average interest rate on loans for the second home was 5.61%. Both were up 2 basis points from the previous month.

In addition, some banks have announced that they no longer issue real estate loans, and the existing loans have been scheduled to 2022. Some banks’ loans issued in March have not been paid.

8.Iron Ore Prices Dropped Under Beijing Scrutiny

Yesterday, the National Development and Reform Commission and the Price Supervision and Competition Bureau of the State Administration for Market Regulation visited the Beijing Iron Ore Trading Center. They also held a symposium on the supply and price stability of iron ore and other commodities. Upon the news, the price of iron ore futures dropped 8.79%. Iron ore imports in May dropped to 89.79 million tons, a month-on-month decrease of 8.9%, setting a new low in the past 12 months.

In addition, productions by domestic steel companies and downstream productions have been restricted. The average operating rate of steel mills fell further last week. Statistics show that last week, the average operating rates of blast furnace at 247 steel plants nationwide was 80.21%, down 0.13% month-on-month and 11.33% year-on-year. Some coke companies in Shandong have begun to gradually implement production restrictions, and the current restrictions are mostly 10% to 20%. Such restrictions are expected to increase gradually.

By【G Translators – Financial Team】
Author: Kate

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