China will soon introduce 11 new measures to reform its financial markets, according to a statement from the Office of Financial Stability and Development Committee under the State Council.
An improved incentive and restraint mechanism will be introduced to urge commercial banks to provide financial services to small and micro enterprises more efficiently. Banks will be evaluated in aspects such as credit allocation, implementation of regulatory policies and product and service innovation and are encouraged to provide differential pricing when lending to those enterprises.
Further reform of small and medium-sized banks will be carried out, such as accelerating capital replenishment of these banks, raising funds through multiple channels and combining replenishment of capital with the optimization of corporate governance.
Governmental financing guarantee institutions at all levels are encouraged to support small businesses and farmers in a bid to share risks and help enterprises resume work and overcome difficulties.
Efforts will be stepped up to crack down on financial violations. In addition, measures to regulate the registration of initial public offering of stocks on ChiNext and further open up the credit rating industry, among others, will also be introduced.
The implementation of the new measures will improve the efficiency of the capital market, help protect the rights and interests of investors and maintain financial stability, said Wen Bin, chief analyst at China Minsheng Bank.
Market liquidity
The People’s Bank of China (PBoC), the country’s central bank, on Thursday continued to pump cash into the financial system via reverse repos to maintain liquidity in the market.
The PBoC injected 240 billion yuan (US$33.67 billion) into the market through seven-day reverse repos at an interest rate of 2.2%.
The move aims to offset the impact of factors including government bond issuance and final settlement of corporate income tax, and keep liquidity in the banking system at a reasonably sufficient level, said the central bank.
As no reverse repos matured Thursday, this led to a net injection of 240 billion yuan into the market. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
Three Shenzhen-listed firms
The Shenzhen stock exchange has for the first time alerted overseas investors about the danger of reaching an upper limit of ownership in three Chinese firms, including Midea Group, Centre Testing International and Suofeiya Home Collection.
Foreign investors held 27.3% of consumer electronics maker Midea’s shares, 26.3% of the third-party certification and testing firm’s stock and 26.2% of the furniture manufacturer’s equity as of May 25, the bourse said in a statement. The limit is 30%.
Chinese markets have continued to attract overseas capital via the Hong Kong Stock Connect programs amid global volatility caused by Covid-19. By Wednesday, net inflows reached 20.8 billion yuan for this month. However, Shanghai’s and Shenzhen’s two main stock benchmarks have fallen in the past two full weeks.
Company news
Huawei Technologies, a Shenzhen-based technology firm, said in a statement Thursday that the company was disappointed with the ruling in Chief Financial Officer Meng Wanzhou’s case by the Supreme Court of British Columbia.
“We have repeatedly expressed confidence in Ms Meng’s innocence. Huawei continues to stand with Ms Meng in her pursuit for justice and freedom,” said the statement. “We expect that Canada’s judicial system will ultimately prove Ms Meng’s innocence. Ms Meng’s lawyers will continue to work tirelessly to see justice is served.”
A Canadian judge ruled on Wednesday that the extradition case against Meng can proceed. According to the ruling, the case meets the Canadian extradition standard of so-called “double criminality.”
Zijin Mining Group, a Hong Kong-listed company, said it has registered its fully-owned Tibet Zijin Industrial Co Ltd in Lhasa with a subscribed capital contribution of 2 billion yuan. Zijin also said its shareholders’ meeting will be held on June 12.
The story was written by Huang Wanyi and Nadeem Xu and first published at ATimesCN.com.