China Market Intelligence
Timely, relevant and actionable information and analysis on China
Daily Wrap: Restrictions on Defaulters, Grain Protectionism
Defaults have been on the rise this year, prompting new restrictions on defaulters. On September 22, the Supreme People’s Court ruled companies or individuals who fail to service their debt will not be permitted to bid on government-funded projects. Agencies with clients that have defaulted are also banned from presenting on their behalf. A national database will be used to conduct background checks. Shanghai Composite Index dropped 0.28% to 3,033.90, Shenzhen Component Index fell 0.49% to 10,609.70, CSI 300 decreased 0.47% to 3,275.67, and ChiNext was down 0.55% to 2,156.51. Hang Seng Index fell 0.31% to 23,686.48.
Shanghai FTZ to Further Open for Foreign Investment Banks
Shanghai is looking to further liberalize its financial markets. According to Shanghai’s Financial Services Bureau, the list of domestic financial companies that a foreign investment bank can form a JV with will be expanded beyond brokerage firms. Newly-founded foreign securities firms will also have policy restrictions loosened. These firms will be able to offer brokerage, proprietary trading, and wealth management within their first year rather than waiting an allotted time period to be granted a license. Easing foreign ownership caps are also being explored for JV securities and futures firms. The current cap is 49%. Further opening of the wealth management sector to foreign investors is also being discussed.
WeChat Invites Developers to Write In-App Mobile Services
WeChat, owned by Tencent [0700:HK], is testing a new feature called Xiaochengxu, or "Little App", that will allow users to access a variety of mobile services without downloading separate apps. WeChat will enable developers to take advantage of various functions in China's most widely used social app, such as its digital wallet function. According to Zhang Xiaolong, the father of WeChat, the new feature aims to benefit startups by significantly lowering the cost of building up a business.
Kunlun Sells 3% Stake in Live Streaming App Inke for RMB210m
Internet company Beijing Kunlun [300418:CH] is selling a 3% portion of its stake in live streaming app, Inke, to investment firm, Jia Xingguan, for RMB210m. Kunnuo, a wholly-owned subsidiary of Kunlun, will hold 10.23% after the sale. A spokesperson for Kunlun said the company made a profit of RMB195m from Inke’s stake, after investing approximately RMB65m series B for an 18% stake in January 2016.
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