10/16/2021 Financial News In China: Xia Haijun Discusses Restructuring In HK; CSRC Announced QFII Financial Derivatives

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1.Evergrande President Xia Haijun Discusses Restructuring With Investment Banks In HK

Two sources said that the president of Evergrande Group is in Hong Kong to discuss possible restructuring and asset sales with investment banks and creditors. The two sources told Reuters that Xia Haijun had been in Hong Kong for more than two months.  Xia Haijun is a confidant of Xu Jiayin, Chairman of Evergrande, and is responsible for the daily operations of the group, including financing.  Evergrande has many businesses in Hong Kong.  A third source said that Xia Haijun is negotiating with banks and creditors in Hong Kong, but did not disclose the content of the discussions.  Evergrande is burdened with debts of more than 300 billion U.S. dollars. At present, three U.S. dollar bond interest has not been paid at maturity. Foreign investors have no idea about the repayment plan.  There has never been a report about Xia Haijun negotiating with investment banks and creditors in Hong Kong. One of the sources said that Xia Haijun needed to communicate with foreign banks on loan extension and repayment.  The source refused to disclose the identity of the creditors who had negotiated with Xia Haijun in recent days.

2.The China Housing Association Held Housing Company Symposium

As the debt crisis of Chinese real estate companies spread, the official website of the China Real Estate Association-China Real Estate.com said on Friday night that the China Real Estate Association held a seminar on real estate development companies in Beijing this afternoon.  The news from Chinafang.com also stated that the participating companies introduced the production and operation of the first three quarters, analyzed the market situation, and put forward some opinions and suggestions.  Policy sources and analysts told Reuters that despite the economic slowdown, Chinese leaders worried that the real estate bubble may undermine long-term development may continue to maintain strict controls on the real estate industry, but may soften some strategies if necessary.  Since the beginning of this year, Chinese real estate companies have experienced continuous thunderstorms under the policies of “three red lines”, loan concentration, third-tier and fourth-tier policies. China Fortune Land Development, China Evergrande, and Fantasia have successively erupted in debt crises.

3.CSRC Announced Financial Derivatives Types Of QFII

The People’s Bank of China and the State Administration of Foreign Exchange have recently announced that qualified foreign investors (QFII) can participate in financial derivatives transactions.  Three new types of products, including commodity futures, commodity options, and stock index options, were newly opened.  The purpose of participating in the trading of stock index options is limited to hedging transactions.  The above regulations will be implemented on November 1, 2021. The press release here on the official website of the China Securities Regulatory Commission also stated that expanding the investment scope of qualified foreign investors will provide foreign investors with more hedging products and allocation tools, which will help attract more foreign capital and increase the international influence of the domestic capital market.  At the same time, it will promote the timely opening of more varieties and deepen the opening of the capital market.

Comment: The 70-year experience of the Communist Party of China in power tells us that deepening reform and opening up is just a gimmick, bargaining chip and bargaining.

4.Futu AndTiger Plummeted Late at Night, Evaporating More Than 10 Billion

U.S. stocks rose across the board on Thursday, Eastern Time. China’s brokerage stocks fell sharply against the market. Tiger Securities fell more than 21%, and Futu Holdings fell more than 12%. The total evaporated market value of the two was equivalent to more than 11 billion yuan.  The latest market value shows that the total market value of Futu is about 10.7 billion U.S. dollars, and the total market value of Tiger is about 1.3 billion U.S. dollars. On the news, on October 14, People’s Daily Online stated that cross-border Internet brokers such as Futu and Tiger are at risk in terms of user information security and legalization and compliance.  After actually testing the account opening process, People’s Daily Online said that there are two major concerns in the business model of Tiger and Futu: one is the security of information collection, and the other is the issue of where the information goes. The “Personal Information Protection Law of the People’s Republic of China” (referred to as “Personal Information Protection Law”) will come into effect on November 1, 2021, and there is still less than one month.

5.The Average Premium Rate Of The Second Batch Of Centralized Land Supply In Shanghai Is 3.35%

On October 14, the Shanghai land market announced the results of the second batch of centralized land supply transactions. The total transaction price of 41 plots was about 53.838 billion yuan, with an average premium rate of 3.35%, and a planned construction area of ​​4.0106 million square meters. Among the 41 plots, 14 plots were acquired for resettlement housing, 2 plots for urban villages, 7 plots for leased residential buildings, and 18 plots for ordinary commercial residential buildings. The total transaction value of 18 land plots for ordinary commercial housing was 45.006 billion yuan, with an average premium rate of 3.87%. 6 land plots entered the one-time written quotation stage after reaching the stop price, and 9 land plots were sold at the reserve price. The highest premium rate this time is the land 48-06A on the north side of Huqingping Highway, West Hongqiao, Qingpu District, which was jointly bid by Shanghai Xiangyu Real Estate Co., Ltd., Yantai China Merchants Real Estate Co., Ltd., and Shanghai Junxiang Real Estate Development Co., Ltd.  , The total price is 6.395 billion yuan.

6.The Central Bank Continues To Do The Same Amount Of 500 Billion MLF

According to the official website of the central bank, in order to maintain reasonable and sufficient liquidity in the banking system, on October 15, 2021, the People’s Bank of China launched a 500 billion mid-term loan facility (MLF) operation (including the renewal of the MLF expired on October 15) and 10 billion  Yuan reverse repurchase operation.  Data show that today, 500 billion yuan of MLF and 10 billion yuan of reverse repurchases expire. The announcement shows that the 500 billion MLF term is 1 year, the winning bid rate is 2.95%, the 10 billion reverse repurchase period is 7 days, and the winning bid rate is 2.20%.  Guotai Junan analyzed that the liquidity gap in the fourth quarter was relatively large, with the monthly average being at the trillion level.  On the one hand, the MLF maturity is huge, with 500 billion yuan, 1,000 billion yuan and 950 billion yuan in October-December, totaling 2.45 trillion yuan. On the other hand, the issuance of local government bonds accelerated in the fourth quarter. As of September 30,  The issuance of local government bonds was 5.62 trillion yuan, with a progress of 71.4%, compared with 91.0% in the same period of the previous year. The issuance of local government bonds accelerated in the fourth quarter and the liquidity absorption effect was strong.

7.National Electric Vehicle Sweden Co., Ltd. Is Negotiating With Investors

The CEO of National Electric Vehicle Sweden Co., Ltd. (NEVS), a subsidiary of China Evergrande Group, said on Friday that the company is negotiating with venture capital firms and industry partners in the United States and Europe to sell the company.  Responding to a possible default of more than US$300 billion in debt.  Stefan Tilk, CEO of NEVS, said the company has the funds to maintain it for “a period of time”, adding that several investors have shown interest in the company.  He declined to comment on possible valuations.  A person familiar with the matter said that the company’s valuation may be as high as $1 billion. NEVS is mainly discussing possible sales or other financing with companies in Europe and the United States, but declined to disclose the names of these companies.  “We are in dialogue with venture capitalists and companies that have the same ideas and directions as ours and want to use our capabilities to enter the field,” he told Reuters. “Therefore, these people have both industry partners and  Venture capitalist.” He added that if it can survive the crisis, the company may recruit staff again to reach the scale Evergrande wants to establish in Europe.  NEVS issued a layoff notice to nearly half of its approximately 650 employees in August.

8.China Consumers Association Releases Consumer Opinion Report

The China Consumers Association released an analysis report on public opinion on consumer rights protection during the “Eleventh” period.  The report pointed out that during the 10-day monitoring period from September 30 to October 9, the system collected 9,518,930 pieces of information related to “consumer rights protection” related to the “Eleventh” period, with an average daily information volume of more than 950,000 pieces.  The most on September 30 was 1,277,191.  Monitoring found that the negative and sensitive information on consumption during the “October” holiday this year was mainly concentrated in four aspects: transportation, scenic spots, express delivery, and food consumption.  Among them, during the monitoring period, 240,967 pieces of negative and sensitive information related to “food” were collected. On September 30, the amount of negative and sensitive information was 61989.  The concentration of negative and sensitive information in the “food” category on September 30 was mainly related to the blogger’s disclosure of the use of expired raw materials for Tea Baidao.

By【G translators – Financial Team】
Author: 雪梨

Disclaimer: This article only represents the author’s view. Gnews is not responsible for any legal risks.

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