After couple of months of low trading volume and little news, BTC China, previously the largest and still one of the most prominent bitcoin exchanges in China has moved the goalposts for other exchanges (and the PBOC!) by launching the first physical Chinese Bitcoin 'ATM' at the IC Coffee Shop in Zhangjiang Hi-tech Park in Shanghai on Tuesday the 15th. In addition to the physical ATM, BTC China released a new mobile Web appcalled “Picasso ATM”, which is actually the main theme of the ATM launch.

On China's supposed bitcoin 'd-day', April 15th, BTCChina launches Shanghai ATM what could be the country's first bitcoin ATM. Kapronasia was onsite on launch day and will have an update tonight on our experience using the ATM.

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.

Accroding to the latest figures from the CBRC (China Banking Regulatory Commission), Chinese banks’ asset quality deteriorated as the balance of bad loans continued rising from RMB 492.9 billion in 2012 to RMB 592.1 billion in 2013. However, as banks wrote off significant amounts of bad loans in 2013, the bad loans ratio grew only slightly from 0.95% to 1%, leaving the asset quality in relatively good shape. The largest outstanding bad loans are from the big five banks, who have hit a 10 year peak of bad loans - in total, they have written off RMB 59 billion up significantly from 2012. 

The large amount of write-offs prevent the bad loan ratio from growing fast. In addition, Chinese banks have a relatively higher provision coverage ratio, so they are able to write off more. As China is in the middle of an economic transistion, we estimate that banks’ bad loans will continue rising as exports continue to slow and industry shifts excess capacity. Further 2014 write-offs will be supported by the CBRC’s latest guidance.

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.

Once known for its economic development zone, the rich Yangtze river delta now has become a hotbed for something else: non-performing loans. 

The latest data from big five banks’ 2013 annual report shows that the cumulative profits in 2013 were RMB 870.3 Billion, accounting for approximately 60% of the banking industry. However, comparing with previous years’ performance, the net Chinese banks' profit growth rate of 2013 has slowed with the exception of BOC, which increased slightly. This decreased profitability is mainly due to narrowed net interest margin. Last year, in the context of interest rate reform and the influence from money funds, banks have been facing challenge and forced to transform. This will likely continue to become more pronounced in the future as banks are heavily reliant on interest income rather than fee income. 

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. 

After the PBOC’s suspension of QR code payments and virtual credit cards, they have begun soliciting comment on draft guidelines on “Payment Institutions Network Payment Business Management Approach” (provisional).