Displaying items by tag: capital markets

The regulatory culture in the Asia-Pacific region shows a preference for incremental change being initiated in the markets by the regulators, as opposed to big bang measures. The manner in which the mainland Chinese markets have been slowly liberalized has been discussed in an earlier commentary. In this one, we look at the some of the upcoming changes being proposed in India and how they fit into the overall approach of the capital market regulator in the country.

The new US President Donald Trump has made clear his intention to roll back, and possibly repeal, the Dodd-Frank Act of 2010. This will have wide-reaching repercussions for Asia.

Published in Asia Banking Research

The launch of the Shenzhen-Hong Kong Stock Connect on December 5, 2016 was an important next step in the liberalization of China’s capital markets. The platform will offer a new opportunity for foreign firms to access the Chinese capital markets through the Shenzhen Stock Exchange, which is prominent for its technology stocks and exhibits higher returns than the Shanghai Stock Exchange, partly because its listed companies are newer and smaller.

On September 4th, Urjit Patel officially became the new central bank chief in India. He succeeded Raghuram Rajan, who was famous for largely stabilising the economy during his three year term. Under Patel's leadership, the Reserve Bank of India (RBI) is expected to continue the current policy regime.

Published in India Banking Research

Kapronasia was co-organizing the PitchIt part of the LendIt 2016 event in China and we had a chance to talk to a number of exciting fintech start-ups. Two of the pitching start-ups are targeting Chinese retail investors but they do this in a very different ways, which, in fact, tells us a lot about the mindset of retail investors in China; the start-up which understands the market better wins. 

On May 27th, the People’s Bank of China (PBoC) released the implementation details that will govern foreign investment in China’s interbank bond market. The new rules make it much easier for certain foreign investors to participate in Chinese bond market activities, such as borrowing/lending, futures/forwards, and swaps, including interest rate agreements. 

Last week in China, the China Securities Regulatory Commission (CSRC) prohibited listed companies from raising capital earmarked for investment in the following four industries: Internet Finance, Video Games, Film and TV, and Virtual Reality. The new prohibition is an attempt to steer money into the real economy, which is defined as industries producing tangible products and services. Permissions for mergers, acquisitions, and refinancing in those ‘unreal industries’ have been halted, as well.

In China this year, over 3,700 billion RMB (about 570 billion USD) worth of domestic debt will expire, a record-breaking amount. Many companies will face difficulty in rolling the debt over because of the limited size of the whole bond market. Even if just a small percentage of the whole market defaults, the amount defaulting would still be so large, it could start a crushing storm for an already vulnerable Chinese economy. Many defaulting state-owned companies are from sectors in difficulty as China slows, such as mining and heavy industry. This makes the possibility of default more likely to happen. And in the environment of a slowing debt market, things will probably get worse.

Published in China Banking Research

Shanghai Gold Exchange started trading a new gold contract on April 19th. The contract is meant to become a global benchmark similar to the gold fix originated in London and New York, but denominated in RMB.

Published in China Banking Research

And these are not Fintech startups alone. The banking sector is trying to woo this very important and growing ecosystem in the country. Some banks have resorted to novel ways of doing so. RBL (Ratnakar Bank Limited) has announced opening of a branch in Bengaluru dedicated exclusively to cater to the growing startup ecosystem in that city.  This comes close on the heels of SBI recently announcing the establishment of its branch called InCube in Bengaluru recently. RBL bank plans to launch several such branches across the country in the future.

Published in India Banking Research
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