The latest figure announced by the CSRC indicates that in early 2014, the number of Chinese securities investment funds registered increased, with the total turnover declined dramatically.
With the introduction of regulations on preference shares by the CBRC and PBOC in this March and April, banks seem to be willing to explore the new financing option.
The latest figures from online saving funds financial statements have shown that the BAT (Baidu, Alibaba, Tencent) online money funds continued expanding. The 2014Q1 data reveals that Tianghong Zenglibao, relying on the huge client base of Yuebao, lead the market and is the first online saving funds that exceeds RMB100 Billion.
Over the next week, we'll be publishing a number of articles looking at the upcoming Alibaba IPO which could be the largest tech IPO ever. Today we look at the financials filed with the SEC.
On April 14, 2014, Shanghai Stock Exchange-traded *ST Changyou was delisted, becoming the first state owned company to be delisted in A-share markets.
As US SEC’s investigation on large investment banks recruiting Chinese governmental officials’ and SOE senior managers’ children is going further than any such probe before, the dark side of foreign companies operating in Chinese markets is gradually being exposed to the public. However, that probably doesn’t come as a surprise for the Chinese public which has known and suffered from the ‘unwritten rules’ for a long time.
The latest statistics about the A-share markets illustrate the main industries that QFII funds invested at the end of 2013, according to data from 1334 listed firms’ 2013 annual reports. The banking industry is the most attractive industry for QFII investors, taking about 1/3 of the total new shareholding volume with the steel industry and automobile industry ranked the 2nd and the 3rd.
The banking industry makes sense because of the relatively low valuations. The steel industry is currently suffering in China, so QFIIs likely have confidence that Chinese urbanization and development of automobile industry will continue. For automobile industry, as Chinese government intends to push hardly on new energy vehicles especially electricity-powered vehicles, could pose an interesting QFII investment allocaction.
High frequency trading (HFT) has roughly been in existence since 1999 in the US as execution times have shortened from several seconds to millisecond or even microseconds due to advanced trading technologies and a general demand for increased speed. Figures from August 2013 showed that in the global FX market, HFT took approximately 40% of the total trading volume, within which, almost half of the volume happened in the spot market. For the global futures market, HFT volume represents about 40% of the total volume. In the equities market in the US, HFT volume took approximately 73% of all equity order volume. Typical strategies executed by HFT traders are trading ahead of index fund rebalancing, market making, ticker tape trading, event arbitrage, statistical arbitrage, news-based trading and low-latency strategies.
You'd be forgiven for missing it, but in the buying spree that we've seen in the last couple of weeks from Alibaba, one of the most significant investments was for a controlling stake in Hundsun Technologies. The ~US$532M investment in the firm means that Alibaba now has control of nearly 95% of all domestic trading systems in China and continues to consolidate its position as a financial technology provider.
A couple of days ago, media announced that Alibaba had made a substantial investment in InTime, which is a Hong Kong company that manages mainland China upper-end retail malls. These malls are typically branded InTime, but are multi-brand inside where each brand has a small section and potentially dedicated staff to that section.
On March 3, 2014, the chairman of the council of the Shanghai stock exchange Gui Minjie declared that there is no technical barrier for the release of T+0 trading mechanism specially for blue-chip stocks traded on Shanghai Stock Exchange. The chart below showed that the large-cap stocks based indices have lower turnover rate than the indices with more proportion of small and mid-cap stocks. The T+0 in Shanghai Stock Exchange could possibly stimulate the trading of large-cap stocks on A-share markets. The speech of Mr. Gui implied that the T+0 mechanism might be close to launch in 2014.
February 2014, represented another month of decreasing commission fees in China's capital markets as the entrance of China's technology giants in internet finance starts to affect not just banks, who are losing deposits, but securities brokers whose fees are being squeezed.
Yu’ebao had already made Tianhong Asset Management the largest one in the public fund industry in China in early 2014. However, the scale of Yu’ebao has continued to grow with the latest figures showing the AUM of Yu’ebao reaching RMB400bn on Feb 14, 2014, a leap of 60% compared to only one month ago. The speed of capital inflow is still accelerating in 2014. We may witness Yu'ebao becoming the largest money market fund in the world soon.
The fast expansion of Yue bao AUM data of Chinese money market funds, especially the ones leveraging Internet Finance, reflects the large wealth management demand potential of Chinese market and new innovative finance forms that will appear in the Chinese market in 2014.
According to data from the China Securities Depository and Clearing Corporation Limited (CSDC), there were 261 new Qualified Foreign Institutional Investor (QFII) accounts opened in 2013 which represents about 43% of the total QFII account number from 2003 to 2013. Compared to 2012 figure. Number of QFII accounts rises by 129%.
So why are foreign investment institutions so interested in opening up accounts to trade the Chinese market when returns are so low? One reason is that the mainland regulators have been pushing towards more open markets and lowering the QFII requirements with the intent of introducing foreign capital to provide better liquidity in an anemic a-share mainland market. In addition to new accounts, more than $49.7 billion in QFII investment quota was approved in 2013.
The potential second reason is that foreign investors see potential opportunities in the mainland market either with current relatively low valuations or in the anticipation of future market growth if the market does pick up.