8/5/2021 Financial News: New Credit Size May Shrink To 1.2 Trillion Yuan; Shandong Asks Private Refiners To Stop Trading Crude Oil Import Quotas

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1.Fitch Downgrades Evergrande Group and Subsidiaries Evergrande Real Estate and Tianji Holdings to “CCC+”

After achieving an over-expected growth in June, the market expects new RMB loans and social financing scale to fall back in July. Personal housing loans may become an important factor affecting RMB loans in July. Bank of Communications Financial Research Center sees the scale of new credit shrinking to 1.1 trillion yuan in July, with a credit balance of about 186.6 trillion yuan and a year-on-year growth rate of 12.3% unchanged from the previous month. The reason is that the production activity of enterprises in July has significantly decreased compared to June, prompting a lower demand for new credit from enterprises; the scale of commercial housing transactions in 30 large and medium-sized cities has slightly shrunk compared to June, while the control of personal housing loans continues to tighten. Several hot cities have seen higher mortgage rates and longer lending cycles, so it is expected that new medium- and long-term loans to residents will shrink significantly compared to the ring. In addition, government bonds may be a drag on the growth of social finance in July.

2.Shandong Asks Private Refiners to Stop Trading Crude Oil Import Quotas

Shandong Province has stepped up efforts to control fuel production by requiring private refiners to pledge not to trade crude oil import quotas. This follows an April sweep by the Communist China government that found several private refiners had traded quotas, including selling them to companies not registered to process imported crude, disrupting efforts to ease a fuel glut that has hurt the profits of state-owned refiners. That prompted the government to reduce the second batch of quotas issued in June and cut crude imports. The government of Shandong province, where private refineries are concentrated, asked 30 refiners to sign a pledge by the end of Wednesday that they would neither resell nor buy crude oil import quotas. Refineries were also asked to commit not to resell or relocate old processing units they had previously committed to dismantling to qualify to process imported crude, according to the document and two sources.

3.Wheat Prices Rise

On August 3, wheat continued to rise; manufacturers gradually increase the number of vehicles. The current factors affecting wheat are epidemic, rotation replenishment, etc.; flour and feed enterprises have a certain amount of their own inventory. Therefore, the short-term should not be overly optimistic. As of July 25, the main production areas of wheat accumulative acquisition of 40.443 million tons, according to the home Bureau of Statistics released 2021 wheat production of 134.34 million tons Kuang calculations, the current acquisition only accounts for 29.81% of the current year’s production, there are still a large number of grain sources stranded in circulation, due to the difficulty of starting this year’s consignment purchase, the supply pressure on the market is obviously postponed. On August 3, 2021, Fuzhou City, Fujian Province, the third rotation of grain reserves (2021) bidding procurement fair, bidding procurement subject: 2021 wheat 31632.730 tons, its offer 3080, 3040. subject No. 1-5 national standard third-class wheat transaction price 2960-2968 yuan/ton, requiring packaging; subject No. 6, 7 transaction price 2894 yuan/ton and 2908 yuan/ton, bulk.

4.Apple Cooperates with Chinese Suppliers to Produce the Latest iPhone Models

Apple AAPL.O is partnering with more Chinese suppliers to produce its latest iPhones, as a technology dispute sparked by a trade war with the U.S. has prompted Beijing to strengthen the power of domestic companies. Lixun Precision 002475.SZ will make up to 3 percent of the iPhone 13 series, with two companies Lixun acquired last year supplying key components, the newspaper reported, citing sources familiar with the matter. The Nikkei website noted that Bluestar would supply the metal housing, Sunwoo Optical will provide the rear camera lens, and BOE will also provide the components. Lixin grabbed orders from Taiwan rivals Hon Hai and PEGATRON and will produce the iPhone 13 Pro this month.

5.Many Regulators Guide Consumer Finance Companies to Cut Interest Rates to 24%

Several local regulators have issued window guidance to consumer finance companies under their jurisdiction, requiring them to reduce their product interest rates to within 24% per annum. However, it is understood that the domestic lending rate ceiling for licensed financial institutions was not clearly set. In this regard, some industry insiders believe that this is a regulatory “fill in the gaps” move and in response to the current economic environment to boost consumer policy. At present, there are still some consumer finance companies whose annual interest rates are set close to 36%. At the same time, many consumer finance companies have completed interest rate reductions under repeated regulatory guidance. Industry insiders said that the median cost of funds for consumer finance companies is around 6% or 7%, “lending within the standards of regulatory guidance, it should be said that most companies still have profit margins.”

6.CFS to Auction Nearly 270,000 Tons of Imported Corn on Friday

Ltd., China’s national grain storage agency, announced that it would sell 21,9818 tons of genetically modified (GM) imported corn of U.S. origin and 49,760 tons of non-GM imported corn of Ukrainian origin on Friday (6). The total amount of the two is 269,578 tons. Trading hours start at 10:00 a.m. (U.S. corn) and 10:30 a.m. (Ukrainian corn) on August 6. Members are required to pre-pay a trade margin and performance deposit of RMB 270 per ton before participating in the trade. In the first half of this year, China imported 15.302 million tons of corn, up 318.5%, and 5.368 million tons of wheat, up 60.1%.After the rainstorm disaster in Henan and other places, the market is worried about the supply of corn production was affected; in some areas in northern China, prices rebounded slightly in the short term, the purchase price rose 2-3 cents per catty but did not drive up national corn prices. As a result, on 26 July, the national average price of corn purchase about 1.3 yuan per catty, remains basically stable.

7.China-US Container Freight Rates Soar to Record Highs Above $20,000

Container rates from China to the U.S. have risen to a new high of more than $20,000 per 40-foot box as increasing retailer orders ahead of the U.S. shopping season increase pressure on the global supply chain. In addition, the accelerated spread of the Delta variant virus in several countries has slowed global container turnaround rates. Typhoons that hit the southern coast of China in late July and this week have also had an impact. Freight tracker Freightos said the China-U.S. East Coast route has climbed more than 500 percent from a year ago to $20,804 per container this week. That compares with a price of just under $11,000 on July 27. Freightos data show that rates from China to the U.S. West Coast are slightly under $20,000, while the latest China-Europe rate is closer to $14,000.

8.Corporate Bonds Issued During the Year Nearly 2.3 Trillion Yuan

Since this year, the issue scale of corporate bonds and corporate bonds has continued to grow. Flush iFinD data show that as of August 3, the total issue size of corporate bonds and corporate bonds reached 228.145 billion yuan, an increase of 9.1% year-on-year. Among them, the company issued 2323 bonds; issue size reached 201.5269 billion yuan, an increase of 7.1%; corporate bonds issued 281, issue size 266.876 billion yuan, an increase of 27%. In addition, this year, corporate bonds ushered in innovative varieties, and the Shanghai and Shenzhen stock exchanges launched carbon neutral corporate bonds and special corporate bonds for rural revitalization. Flush iFinD data shows that as of August 3, 30 carbon-neutral corporate bonds were issued, with a total issue size of 31.55 billion yuan; 4 rural revitalization special corporate bonds were issued, with an issue size of 2.8 billion yuan.

By【G Translators- Financial Team】
Author: Totoro

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