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☆ Chinese rush to buy Hong Kong insurance, dollars as confidence cracks, yuan weakens
▼ + stars: | 2023-07-06 | by ( ) www.reuters.com time to read: +5 min

SHANGHAI/HONG KONG, July 6 (Reuters) - Chinese investors are rushing offshore to make dollar deposits and buy Hong Kong insurance in a signal domestic confidence is languishing and that the ailing yuan faces more pressure. New premiums collected on Hong Kong insurance policies leapt a staggering 2,686% to $9.6 billion in the first quarter of 2023. "The burst of insurance buying in Hong Kong reflects a gloomy domestic outlook, and worries about an uncertain future." "Offshore demand for policies denominated in Hong Kong dollars is low – U.S. dollar-denominated policies are more prevalent, to provide access to global asset allocation," said Lawrence Lam, chief executive officer at Prudential Hong Kong. The wealth manager at Noah fears that a sustained rush into Hong Kong insurance risks inviting Beijing's policy tightening.

Persons: Helen Zhao, lurch, Noah Holdings, Lawrence Lam, Hao Hong, Tan Xiaofen, We've, Sami Abouzahr, Samuel Shen, Winni Zhou, Georgina Lee, Summer Zhen, Tom Westbrook, Kim Coghill Organizations: Hong, AIA, HK, Prudential, Manulife, Noah Holdings, Savings, Bank of China, U.S, Prudential Hong Kong, Investment, School of Economics, Management, Beihang University, HSBC, Thomson Locations: SHANGHAI, HONG KONG, Hong Kong, Macau, COVID, U.S, Beijing

☆ Chinese companies rush for hedging as market volatilities spike
▼ + stars: | 2023-07-05 | by ( ) www.reuters.com time to read: +2 min

SHANGHAI, July 5 (Reuters) - Chinese listed firms are embracing hedging at a record pace, according to consultancy data, as market volatility rises and China grows its derivative market. Forex hedging is popular among Chinese companies, according to D-Union, as regulators allow market forces to play a bigger role in deciding the yuan's value. Companies including Semiconductor Manufacturing Electronics (Shaoxing) Corp (688469.SS) and liquor giant Luzhou Laojiao Co Ltd (000568.SZ) announced plans in the second quarter to hedge against forex risks. Measures to develop China's derivative market also boosted interest in hedging, Ma said. Electronics, basic chemicals, and electrical equipment were among sectors that were most active in hedging during the second quarter, according to D-Union data.

Persons: Ma Weifeng, Ma, Li Gu, Samuel Shen, Tom Westbrook, Gerry Doyle Organizations: greenback, Semiconductor Manufacturing Electronics, Electronics, Sieyuan Electric Co Ltd, Thomson Locations: SHANGHAI, China, Shanghai, Shenzhen, Singapore

The People's Bank of China, which typically issues guidance on dollar deposit rates to state banks, did not immediately comment on the matter. The lenders - Industrial and Commercial Bank of China (601398.SS), , Bank of China (601988.SS), , Agricultural Bank of China (601288.SS), , China Construction Bank (601939.SS), and Bank of Communications (601328.SS), - did not immediately respond to requests for comment. The lower rates could both discourage households from putting savings into higher-yielding dollar deposits and nudge Chinese firms, especially exporters, to settle foreign exchange receipts in yuan. The latest cut in dollar deposit rates was the second in barely a month. Some currency traders also said the cuts in dollar deposit rates would ease pressure on commercial lenders' net interest margin, as banks' dollar deposit rates had risen above lending rates before the recent adjustments.

Persons: Ken Cheung, Banks, PBOC, Winni Zhou, Samuel Shen, Jindong Zhang, Rong Ma, Ryan Woo, John Geddie, Edmund Klamann Organizations: People's Bank of China, Industrial, Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications, Traders, U.S, Mizuho Bank, Reuters, Thomson Locations: SHANGHAI, BEIJING, China, United States, China's, Shanghai, Beijing, Tokyo

SHANGHAI/HONG KONG, June 27 (Reuters) - China should allow cross-border sharing of information by financial firms operating in the country, a leading financial lobby group said, as authorities tighten control of data generated within its borders in a national security drive. Last July, China unveiled cross-border data review measures that require a security review for "important" offshore data transfers - a move that triggered confusion and concern among foreign financial firms operating in the country. The financial sector lobby group said cross-border transfer of data such as investment outlooks, portfolio analysis, shareholding information and anti-money laundering information should be allowed. However, ASIFMA said the data security rules have made operating in China "very painful" for some of its members. One major complaint from firms operating in China is that Chinese data rules are ambiguous, the lobby group said.

Persons: Alice Law, Lyndon Chao, ASIFMA, Chao, Neuberger Berman, They've, Law, Samuel Shen, Selena Li, Sumeet Chatterjee, Sonali Paul Organizations: Asia Securities Industry, Financial Markets Association, BlackRock, Fidelity International, Thomson Locations: SHANGHAI, HONG KONG, China, Beijing, U.S

Hong Kong stocks such as Alibaba (9988.HK) and Tencent (0700.HK) are among the 24 stocks which will be priced and traded in both yuan and the Hong Kong dollar under the Dual Counter Model on the Hong Kong stock exchange (HKEX) from Monday. Offshore yuan deposits in Hong Kong alone are estimated at some 833 billion yuan ($117 billion). "Mainland investors, including mutual fund companies like us, have genuine incentives to trade Hong Kong stocks in yuan," said Ding of ChinaAMC. "There's lot of political uncertainty these days so you may want to hold yuan rather than U.S. dollars, or the Hong Kong dollar, which is pegged to the U.S. ($1 = 7.8217 Hong Kong dollars)Reporting by Samuel Shen and Georgina Lee; Editing by Vidya Ranganathan and Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

Persons: Ding Wenjie, Ding, it's, Dong Chen, YUAN, Sun, Kai Properties, ChinaAMC, David Friedland, Samuel Shen, Georgina Lee, Vidya Ranganathan, Kim Coghill Organizations: HK, Hong Kong, Hong, China, Fund, U.S ., Global Capital Investment, China Asset Management, The U.S, Pictet Wealth Management, AIA, Hang Seng Bank Ltd, Interactive Brokers, Thomson Locations: SHANGHAI, HONG KONG, Hong, Hong Kong, China, Brazil, Russia, Beijing, Moscow, Ukraine, The, Pakistan, Asia, Asia Pacific

Star fund manager Zhang Kun, who manages nearly 90 billion yuan for Guangzhou-based E Fund Management, has seen his flagship 56 billion yuan Blue Chip Selected Mixed Fund lose 8% so far this year. The fund soared 95% in 2020 which attracted significant subscriptions and helped Zhang become China's first so-called "100 billion fund manager". Another high profile fund manager, Ge Lan at Lombarda China Fund Management, saw her flagship 28 billion yuan healthcare fund retreat 7% in 2021 and 23% in 2022, after a nearly 100% gain in 2020. "Not just mutual funds, the overall fund issuance is difficult, as this is closely connected with the economic situation," Steve Chen, partner of Shanghai-based hedge fund manager MX Capital. To boost market sentiment, some mutual funds announced fee cuts or started to purchase their own fund shares recently.

Persons: Thomas Peter HONG, Jiao Jinyuan, Zhang Kun, Zhang, Ge Lan, Emily Gao, Steve Chen, Debbie Dai, Dai, China Asset’s Jiao, Summer Zhen, Sumeet Chatterjee, Kim Coghill Organizations: REUTERS, Z, Ben Advisors, CSI, China Asset Management, Star, E Fund Management, China Fund Management, MX Capital, Thomson Locations: Beijing, China, Thomas Peter HONG KONG, Guangzhou, Shanghai

☆ Chinese quants redouble AI bets amid ChatGPT frenzy
▼ + stars: | 2023-06-05 | by ( ) www.reuters.com time to read: +4 min

REUTERS/Thomas White/Illustration/File PhotoSHANGHAI/SINGAPORE, June 5 (Reuters) - Chinese quant hedge fund managers are rushing to explore ChatGPT-style tools, embracing the emerging AI technology that has sparked a global frenzy since the release of the widely popular Microsoft-backed OpenAI chatbot. His hedge fund already uses ChatGPT to better understand a company's fundamentals and avoid value traps, project earnings power, and identify investment opportunities and risks. A ChatGPT-like tool boosts quants' ability to process text-related data, said Feng Ji, chairman of Baiont Capital. Feng's hedge fund, backed by former Google China chief and AI veteran Kai-Fu Lee, has invested heavily in hardware to enhance computing power required for model-training. Regulators are looking for ways to tackle the impact of generative AI technology.

Persons: Thomas White, Steve Chen, Feng Ji, ChatGPT, Feng, Kai, Fu Lee, Feng's, Larry Cao, Cao, it's, Samuel Shen, Tom Westbrook, Himani Sarkar Organizations: Microsoft, Baiont, Google China, Flyer, Zhishan Investment, Wall, Regulators, HK, Baidu, CFA Institute, Thomson Locations: SHANGHAI, SINGAPORE, Shanghai, Beijing, Feng's Nanjing, China

☆ China's Baidu launches $145 million venture capital AI fund
▼ + stars: | 2023-05-31 | by ( ) www.reuters.com time to read: +1 min

SHANGHAI, May 31 (Reuters) - Chinese search giant Baidu Inc (9988.HK) will set up a venture capital fund of 1 billion yuan ($145 million) to back start-ups focused on content generated by artificial intelligence applications, it said on Wednesday. The company will also launch a competition for developers to build applications off its ERNIE large language model (LLM) or integrate the model into their existing products, it added. E-commerce giant Alibaba Group Holding Ltd (9988.HK) was among the other Chinese companies that followed quickly. In response to the surge of LLMs, China published draft regulations in April on the use of generative AI. ($1=6.9121 Chinese yuan renminbi)Reporting by Josh Horwitz, Samuel Shen and Jason Xue; Editing by Clarence FernandezOur Standards: The Thomson Reuters Trust Principles.

Persons: Ernie Bot, Josh Horwitz, Samuel Shen, Jason Xue, Clarence Fernandez Organizations: Baidu Inc, HK, Baidu, Alibaba, Holding, Thomson Locations: SHANGHAI, China, United States

☆ JPMorgan's Dimon says US, China need to have 'real engagement'
▼ + stars: | 2023-05-31 | by ( ) www.reuters.com time to read: +1 min

HONG KONG, May 31 (Reuters) - JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon on Wednesday said the United States and China need to have "real engagement", during his first visit to China since his 2021 comment about the bank outlasting China's ruling party sparked uproar. So I'm hoping we have real engagement," Dimon said, answering a question about Sino-U.S. decoupling at the three-day JPMorgan Global China Summit in Shanghai. Dimon is on his first visit to China since the beginning of the COVID-19 pandemic. In 2021, he joked that JPMorgan will outlast China's Communist Party, sparking outrage in China and prompting him to express regret. Reporting by Samuel Shen in Shanghai and Xie Yu and Selena Li in Hong Kong; Editing by Christopher CushingOur Standards: The Thomson Reuters Trust Principles.

Persons: Jamie Dimon, Dimon, outlast, Samuel Shen, Xie Yu, Selena Li, Christopher Cushing Organizations: JPMorgan Chase &, JPMorgan Global China Summit, JPMorgan, Communist Party, Thomson Locations: HONG KONG, United States, China, Shanghai, East, U.S, Hong Kong

As Japan and the United States place fresh curbs on Chinese technology firms, local investors are scooping up shares of those firms and state companies, and reaping handsome rewards. New fund launches will potentially channel money into China's technology and chipmaking leaders, including ZTE Corp (000063.SZ), Unisplendour Co (000938.SZ), Montage and Cambricon Technologies (688256.SS). Cutting-edge innovation requires huge and long-term investment, which is beyond the ability of private companies, "but SOEs can do it," Yang said. For example, China's chipmaking sector is now trading at 60 times earnings, compared with 16 for the broad market. But "China needs high valuation in some sectors ... Why don't you put down your wager, while also supporting the country's development?"

But, given the hopes invested in China's economic growth and liberalisation, foreign firms' demand for expert knowledge about the Chinese market, the regulatory landscape, potential business partners and opportunities will inevitably keep growing. Smaller firms saw opportunity to fill the space left by any rivals, like Capvision, that fall foul of China's authorities. China's expert network market, however, will suffer from bad publicity in the short-term, as "no one wants to be associated with police crackdown," said Max Friberg, CEO of Inex One, a Stockholm-based marketplace connecting investors with expert networks. For now though, the trade in expert information clearly has become more cautious. "It's unfortunate that the expert network business gets into the public limelight in such a way," China Insights Consultancy (CIC), the country's second largest expert network company, said in a statement to Reuters.

During these trips, Chinese tourists spent 148 billion yuan ($21 billion), a 128.9% increase from a year earlier, and on a par with 2019 levels. The figures from this year's May Day holiday - the first travel season since the pandemic without restrictions - are being monitored as a gauge of China's economic health. Official data on Sunday showed activity in China's non-manufacturing sector grew in April, albeit at a slower pace than in March. The travel boom during the May holiday "can be seen as a turning point of China's tourism sector", official Xinhua News Agency said on Wednesday. The China Tourism Academy estimates about 4.55 billion domestic tourist trips will be made this year, up 73% from 2022, Xinhua reported.

SHANGHAI/SINGAPORE, April 28 (Reuters) - Chinese banks are ramping up efforts to promote international use of the yuan, and reporting a surge in cross-border yuan business from the country's booming trade with Russia and deepening ties with the Middle East. Harbin Bank Co (6138.HK), in China's Heilongjiang province neighboring Russia, saw its cross-border yuan business grow nine-fold last year to a record, as the Sino-Russia trade grew briskly after the Ukraine war began. Industrial Bank Co (601166.SS), whose cross-border, corporate payment business jumped 50% last year, has also been actively promoting CIPS, China's own global payment system. The bank said it currently helps 153 foreign and Chinese banks connect to CIPS, to advance China's yuan internationalisation strategy. "Increasing the use of yuan in pricing, and settling cross-border oil and gas trade will give a boost to yuan internationalization."

☆ Analysis: China's small steps on offshore use of yuan are starting to add up
▼ + stars: | 2023-04-27 | by ( Tom Westbrook | ) www.reuters.com time to read: +5 min

SINGAPORE, April 27 (Reuters) - China's yuan currency is slowly but surely being adopted for more international payments, which analysts say could lay foundations for a trade system running parallel to the dominant U.S. dollar. True global yuan adoption is unlikely, given expectations that Beijing will want to keep a tight grip on the currency. "Their cooperation could draw other countries to renminbi payments over time and cumulatively, this group could lift the renminbi at the expense of the dollar," he said. "This kind of renminbi internationalisation may achieve Beijing's goals, including reducing China’s exposure to exchange rate fluctuations and mitigating China’s vulnerabilities to U.S. financial sanctions." "Therefore, if exporters want to use yuan to settle trades, they must persuade foreign importers to pay in yuan, which often takes a long time."

Shares of state-owned enterprises (SOEs) have risen sharply since November, when top securities regulator Yi Huiman called for a new model to price them. Mainland-listed state telecom operators China Mobile and China Telecom have jumped more than 50% each this year and China Petroleum & Chemical Corp (600028.SS) has soared 44%, compared with a 5% gain in the benchmark index (.CSI300). More than 10 mutual fund companies have applied to launch nearly a score of SOE-dedicated funds since March, state media reported. E Fund Management Co this week launched a mutual fund, aiming to raise up to 8 billion yuan ($1.16 billion) to be ploughed into shares of strategically important SOEs. State companies' shares have so far outperformed the broader market, delivering what investors term a rare "SOE alpha".

The London Stock Exchange Group (LSEG) (LSEG.L) and UK trade officials visited several cities in China to promote UK capital markets recently. Wilson Xu, a banking veteran from CITIC Securities pioneering the Stock Connect programme, said liquidity will improve when there is a critical mass of Chinese listings. The Shanghai-London Stock Connect was launched in 2019 and the link was expanded last year to include Shenzhen and Switzerland. Even arrangements by SIX to allow roughly 2.5 hours of trading in a session for Chinese GDRs didn't help. Chinese companies, however, have been positive in public disclosures about their forays in Europe which have given them an alternative channel to raise funds and access foreign currency for their operations abroad.

Seven Chinese firms including Chanson International (CHSN.O) and Hongli Group (HLP.O) have launched public offerings in March to raise a combined $82.3 million, compared with just four in the preceding two months. That will "reduce regulatory uncertainty" said Mandy Zhu, head of China Global Banking at UBS, and standardise domestic firms' international listings. "But we will abide by Chinese rules and carry out all follow-up work cooperation if necessary." Earlier in the week, steelmaker Hongli Group, food grain manufacturer YanGuFang International Group (YGF.O) and wheelchair-maker Jin Medical International listed in the U.S, also receiving tepid responses from investors. Reuters reported on Thursday that London is also courting new Chinese listings.

The London Stock Exchange and British officials are ramping up efforts to build a robust pipeline of Chinese firms, trading on London's status as Europe's deepest capital market. Edwards said he thought London was "an obvious choice" for many Chinese companies "given the issues around the U.S.-China relationship." However, the China-Switzerland Connect - an eight-month-old rival scheme - is gaining more traction among Chinese companies, partly due to a relatively easier process. The London Stock Exchange is "actively looking at how they can address some of the issues," Edwards said. Edwards said officials have identified hundreds of Chinese companies that could potentially issue GDRs in London and "are actively approaching them at the moment."

Its offshore debt restructuring, the country's biggest such exercise, is aimed at saving it from a disorderly collapse. The developer has $22.7 billion of offshore debt, all of which is deemed to be in default. A dollar bondholder, who was not authorised to speak to media, likened the debt restructuring plan to lending a bucket of rice to someone and being repaid with two grains a year. Evergrande said on Wednesday that additional financing of 250 billion yuan ($36.65 billion) to 300 billion yuan would be required as it resumes operations over the next three years. If Evergrande fails to push ahead with restructuring plan, the developer may have to face liquidation proceedings filed by an investor in one of its units in a Hong Kong court.

☆ China property stocks fall after Evergrande debt revamp plan
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, March 23 (Reuters) - China Evergrande Group's (3333.HK) long-awaited offshore debt restructuring proposals failed to address investor concerns about the property sector's prospects, sending shares of rival developers lower on Thursday. An index tracking mainland-based property developers (.HSMPI) slipped 1.1% by early morning Hong Kong time, while the broader stock benchmark (.HIS) was flat. Under the debt restructuring plan, Evergrande bondholders were given two main options. "I think its too early to speculate that this could show that the worst is over for Evergrande," he added. Evergrande said on Wednesday that additional financing of 250 billion yuan ($36.55 billion) to 300 billion yuan would be required for its business as it resumes operations over the next three years.

☆ SVB failure offers lesson for China - state media
▼ + stars: | 2023-03-15 | by ( ) www.reuters.com time to read: +2 min

SHANGHAI/HONG KONG, March 15 (Reuters) - The collapse of Silicon Valley Bank (SVB) will not impact China's financial system but offers an important lesson for the country's banking industry, the official Securities Times said in an editorial on Wednesday. An SVB-style bank failure is unlikely to happen in China but the incident would have "important implications for the development of China's small- and medium-sized lenders, and the stability of China's financial system," the editorial said. In addition, China has been closing regulatory loopholes, the editorial said. In the latest move, China said last week it would set up a new national financial regulatory body consolidating oversight of the industry. "Although the SVB incident won't have material impact on China's finiancial markets, China's financial industry still needs to earnestly learn from this lesson, and always prioritise risk prevention and control," the newspaper said.

Chinese start-ups and fund managers said they are still looking to move their money out of SVB once they can. Such banks have offered account services similar to those of SVB, but found it hard to crack the U.S. bank's dominance among early-stage start-ups in China, where SVB has operated for more than two decades and has a local joint venture. STILL HUNTINGSome venture funds said they were in a quandary as SVB had certain advantages and was especially friendly to early-stage start ups. "Not a lot of banks are friendly to venture capital." "But the market space left by SVB will be filled by the next bank, which is an opportunity," said Chen, whose company counts Sequoia Capital China and Wu Capital among its investors and banks with SVB.

☆ SVB collapse could add to China stock investors' anxiety
▼ + stars: | 2023-03-12 | by ( Summer Zhen | ) www.reuters.com time to read: +4 min

SHANGHAI, March 12 (Reuters) - China stock investors, already disillusioned by Beijing's lower-than-expected economic growth target for the year, will be further disheartened by the shock collapse of U.S. lender SVB Financial Group, market participants said. The market mood could be damped further following Friday's sudden collapse of start-up focused lender SVB (SIVB.O), which stirred heated discussion over the weekend in China about its fallout. But many Chinese tech start-ups, especially those with dollar funding, have opened U.S. accounts at SVB. He is cautious about tech stocks that could be impacted by US-China frictions. Still, domestic A-shares will likely outperform offshore China stocks, which are more vulnerable to potential spillover from the SVB collapse, analysts say.

☆ China to guard against risks among property developers - Premier Li
▼ + stars: | 2023-03-05 | by ( ) www.reuters.com time to read: +3 min

Premier Li Keqiang made guarding against risks to top property developers one of the government's priorities this year, amid still cautious buyer sentiment, following through on the work done at a key economic meeting in December. "There are more potential risks in the real estate market and some small and medium-sized financial institutions are exposed to risks," Li said in the government's work report for 2023. "Only when consumer demand for housing is boosted can other real estate problems, including the problem of financial risks of leading housing companies, be truly resolved." Premier Li said the government would resolve housing issues for young people and support the needs of homebuyers. China will ensure developers deliver pre-sold properties and expand the supply of affordable rental housing, the planner said.

☆ Global asset managers in China grapple with fraudulent investor schemes
▼ + stars: | 2023-03-03 | by ( ) www.reuters.com time to read: +4 min

Such scams have become so widespread that China's securities regulator issued a rare statement on Thursday cautioning investors against fund-raising schemes purporting to be from foreign asset managers. The online rackets add reputational risks for global asset managers already suffering from trademark disputes, geopolitical worries, and cut-throat competition in China. "Swindlers mushroom when the economy is bad," said an executive at a consultancy that serves global asset managers in China. "Cheaters and life-long learners ... some tech-savvy ones would even copy the programming of a foreign money manager's website," he said. Scams using Van Eck's brands first emerged in China's southern Guangdong and Southwestern Guangxi provinces, and later sprung up in central Sichuan province, the source said.

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