9/28/2021 Financial News In China: Cryptocurrency Exchanges Scramble To Drop Chinese Users After CCP’s Ban; Power Restrictions Impact Short-term Industrial Production

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1.Cryptocurrency exchanges scramble to drop Chinese users after CCP‘s ban

Beijing’s new blanket ban on all cryptocurrency trading and mining – the broadest yet by a major economy – has sent crypto exchanges and service providers scrambling to sever business ties with mainland Chinese clients. Shares in a range of Chinese crypto-related firms plunged on the ban which closes off loopholes left in previous regulatory crackdowns on the sector. Industry executives noted, however, that many companies had already shifted key portions of their business outside Communist China.

Ten powerful Chinese government bodies said in a joint statement on Friday that overseas exchanges were barred from providing services to mainland investors via the internet – a previously grey area – and vowed to jointly root out “illegal” cryptocurrency activities. In response, Huobi Global and Binance, two of the largest exchanges globally and popular with Chinese users, stopped new registrations of accounts by mainland customers. Huobi also said it would clean up existing ones by the end of the year.

2.Communist China’s Evergrande crisis has overshadowed the real estate industry

China Evergrande, which is deeply mired in the debt crisis, has cast a heavy haze on other real estate companies. Since the implementation of the “three red lines” and the new concentration regulations last year, real estate companies that have always adhered to the “high leverage-high debt” model have been struggling to survive. The ever-increasing Evergrande incident seems to be changing from a single crisis to an industry panic. According to people familiar with the matter, the outbreak of the Evergrande crisis has aggravated financial institutions’ doubts about loans related to other developers. Some banks have requested some real estate companies to repay loans in advance in various names, which may increase the financing pressure of related companies.

3.Communist China’s power and production restrictions impact short-term industrial production

The year-on-year growth rate of Communist China’s industrial corporate profits in August fell to the lowest level since September last year. The profit “distribution” of upstream and downstream industrial companies was unreasonable, and short-term profits of some mid- and downstream companies were obviously squeezed. The profit growth rate of high-tech and consumer goods manufacturing industries has further slowed down, but high commodity prices have driven the mining industry and raw material manufacturing industries to maintain a relatively high growth rate. Among them, the profit of the coal industry has increased by 2.41 times year-on-year.

Under the influence of multiple factors such as strong demand and “carbon reduction”, Communist China’s coal prices have risen sharply. While the coal industry is making a lot of money, the impact of the lack of coal and electricity on the Chinese economy is further increasing.

4.Geely chairman’s smartphone project aims for 2023 product launch

A smartphone venture launched by the chairman of Chinese automaker Zhejiang Geely Holding aims to roll out its first phone by 2023 and to sell 3 million units in the first year, according to an internal memo seen by Reuters. Eric Li, also known as Li Shufu, on Tuesday launched a company that Geely said would make premium smartphones, entering the highly competitive handset sector. The project will be funded with a 10 billion yuan ($1.55 billion) investment and is also targeting revenue of 10 billion yuan in its first year. It aims to achieve cumulative revenue of 150 billion yuan within eight years and to employ 3,000 people, the memo said.

5.The tone of monetary policy remains unchanged, and there will be fine-tuning policies in the real estate industry

When Evergrande’s crisis is still unsolved, the People’s Bank of China has recently emphasized maintaining the healthy development of the real estate market. Analysts believe that the impact of multi-regional restrictions on production and electricity, domestic inflationary pressures are gradually rising, and in the context of global policy tightening, it is unlikely that Communist China will return to a loose track. In order to prevent risks, it is not ruled out that there will be fine-tuning policies in the real estate industry.

6.Feed companies have announced price increases

According to statistics related to the feed industry information network, although many oil plants have not quoted prices due to the impact of power restrictions. However, the 43% protein soybean meal of the relevant mainstream coastal oil plants that have already paid the price is 3830-3930 yuan/ton. Compared with Friday’s 3800-3910 yuan/ton, an increase of 20-30 yuan/ton. The soybean meal quotations of some oil plants in the Midwest have exceeded 4,000 yuan/ton. This is mainly due to the reduction in the number of soybean crushes in many oil plants under the influence of power restrictions and production restrictions, which has reduced the output of soybean meal.

7.Sunac China denies asking for help from the government, it is only an operational error, and the overall operation is healthy

Sunac China Holdings Ltd. said its operations were normal, and it didn’t submit the document circulating online that suggested its unit was facing liquidity issues. A draft compiled for making a verbal report to the government had accidentally leaked last Friday morning. The document circulated online had sought help from the government in Shaoxing, a city in the eastern province of Zhejiang. It stated that the local property market had cooled to a freezing point, with home buyers losing their appetite as authorities had imposed curbs on prices, sales and resales, and had slowed approval of home sales and mortgages.

In Tuesday’s statement, Sunac China added that its projects nationwide were operating normally, and its January-August contracted sales rose 33% year-over-year to 415.1 billion yuan ($64.29 billion).

8. The prices of third-generation refrigerants have soared collectively

Prices of third-generation refrigerants continued to soar in September. Among them, R134a rose by nearly 50% within the month, and the latest price reached 33,200 yuan/ton. After entering September, the prices of third-generation refrigerants have continued their surge since the second half of August. According to data from the Business Agency, September 27, an increase of 48.51% from September 1, and an increase of 61.79% from the low of August 16. September and October are generally the stocking period for downstream industries such as air conditioners and refrigerators. The industry’s prosperity has recovered and market demand has increased sharply, boosting the price of refrigerants.

Zhongtai Securities believes that the continued tight supply and demand has led to an upward trend in the industry. And with the imminent implementation of the third-generation refrigerant quota management measures, new and old energy-efficient cars, air conditioners, and refrigerators will accelerate the upgrade and iteration, and industry demand is expected to increase significantly.

By【G Translators- Financial Team】
Author: Tracy

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