Asia Financial Industry Blog

Kapronasia is pleased to be a media partner for the Emerging Asia E-Commerce & Supply Chain Conference to be held in Bangkok on July 29th-30th, 2015. The event continues to be one of the key events across the region and is this year again in Thailand, where payments and e-commerce remain a key focus for the country going forward. 

As in anything in the financial industry, there are winners and losers, although you could not be faulted for seeing more of the latter recently in China than the former. The market was up last week slightly, as it seems to be starting to shaking off the downward trend. It may not matter though, as there has been serious damage done.

The booming A-share market in China has attracted a lot of attention and capital over the past few months. Yet, the past few weeks have not been pretty as the market has fallen by over 40%. The government is pulling out all the stops to stop the decline.

The big data e-commerce powerhouse Alibaba is now eager to leverage their data on millions of users and transactions in new projects. This time they have followed their formidable rival JD.com by moving into the crowdfunding area to extend financing to SMEs.

UBS reported that it had purchased an additional 4.99% stake in its Mainland securities business from the International Finance Corporation, increasing its stake to 25% from 20%. The raised stake is a positive sign showing global investment banks are confident in China's capital markets.

Earlier this month, Zhongrong International Trust became China’s first issuer of offshore bonds, beginning the Chinese trust industry’s venture into international capital market. This exemplifies the great expansion the Chinese trust industry has experienced in recent years.

As Italy’s economy is struggling to find growth opportunities, well-off Chinese immigrants and businessmen seem to do well in the country. Chinese individuals are reported to be buying everything from fancy cars to real estate and are opening small businesses. But according to local government, their prosperity was not reflected in the local tax records to the extent the government expected it to be.

The versatile internet powerhouse Alibaba group is now sitting on the goldmine of big data and is innovatively monetizing it through internet finance. This time Alibaba Group's online payment system Sesame Credit applies the cutting edge big data-based credit rating system in partnership with Luxembourg's Consulate General in Shanghai for a launch of a credit-based visa application service.

Since Beijing became more cautious on the use of foreign technology in the banking sector, Chinese banks have been intensely trying to figure out what to do next. One bank is not waiting and it's no surprise that the soon-to-launched Alibaba-affiliated internet private bank MYbank is moving in lockstep with the government policy as well as develop its own long-term technology strategy. MYbank announced it will be using an in-house cloud computing system instead of products from IBM, Oracle and EMC (IOE).

A growth enterprise board in China is a part of stock exchange that has lower listing requirements and allows smaller, often high-tech enterprises to trade shares and gain access to a transparent funding channel. ChiNext, a part of Shenzhen Stock Exchange, is the southern city's growth enterprise board, has been very successful at attracting investors and issuers. Beijing also has its New Third Board, and now Shanghai, Eastern China's innovation center, will provide a venue for small high-growth companies to raise money on the capital markets.

Since its launch 3 years ago, popular third party POS payment provdier Square has gained a respectable level of global adoption. Clients have access to 130 currencies in four languages worldwide. Despite the great success, we haven’t seen any presence of Square in China.

The US online payment service provider PayPal has big plans for helping merchants and customers worldwide. Earlier this week, it has announced his partnership with the most popular payment card in China UnionPay to provide Chinese cross-border shoppers with an easier way to complete their transactions via UnionPay Online payments. The ability to make purchases using UnionPay cards has been one of the most requested features from Chinese customers.

A whole generation of ordinary Chinese have been neglected in terms of wealth management and banking with high minimum investment thresholds or VIP-only products preventing only a select few from getting access to traditional wealth management products. Alibaba and Tencent have brought innovative internet finance based services such as Tenpay or Alipay to the market and have further opened up wealth management to an entire new segment of the market with 'mass-market' wealth management products. China’s e-commerce powerhouse Alibaba now is after banking industry.

Want to unload that bad debt on your books? Now you can on Taobao. Cinda Asset Management, one of China’s Big 4 state-owned bad asset managers, has partnered with Taobao to sell RMB 4 billion-worth of creditor’s rights on the e-commerce company's asset disposal platform. This is seen as another potentially very successful cooperation between finance and internet industries as a large asset owner will have access to many new buyers through Taobao’s powerful channel.

China's taxi / ride hailing app sector is heating up again as internet giant backed Didi and KuaiDi Dache are about to launch 1 billion RMB subsidy for premium cars coupon. Not to be outdone, competitor Yidao teamed up with Baidu. The country's leading search engine allows Yidao to embed its chauffeured car service in its map app. 

With over 270 million active Alipay Wallet users and extensive collaborations with overseas global online merchants, Chinese e-commerce payment powerhouse Alipay now is making its expansion into China’s domestic offline stores and soon to the global market.

The shares of three companies recently experienced an unprecedented slump, which nobody can precisely explain.

At a recent conference, the Asset Management of China (AMAC) declared that there are 713 hedge funds in Zhejiang province alone – a surprisingly large number, considering some of the statements by international experts as recent as 2014 that there are no more than ten hedge funds in China. Futures trading is also up 30% on the main exchanges in China - a strong correlation. 

Xiaomi teamed up with E Fund Management to offer a new money market fund last week. The fund will be available on the wealth management app installed on the Xiaomi operating system and will be similar to products offered by Alibaba and Tencent in that it offers higher-than traditional bank deposit rates and allows nearly instant liquidity.

A new partnership between CreditEase and Wellington has changed the rules with an incredibly easy way for the increasingly wealthy middle-class to invest abroad. 

Globally there have been few examples, if any, of traditional financial institutions getting full use of customer big data to provide a mass-market asset management product. There are of course specialized hedgefunds and wealth management products that track market sentiment, but few beyond that. In China however, Internet giant Baidu and now, more recently, E-commerce tycoon Alibaba group are both changing the fintech landscape by how they are leveraging big data to bring new products to market. 

According to data from the People's Bank of China, by the end of 2014 China had 614,900 ATMs in operation across the country, up 18.25% from 2013. While certainly a rapid growth, it was actually slower than a year ago when the number of networked ATMs increased by 25.12%, and is significantly lower than its peak growth of 36.18% in 2008.

P2P woes continue in China as illegal fundraising through P2P platforms grew in both 2014 and 2015. When will the government intervene?

Accenture recently released its Accenture North America Consumer Digital Banking Survey for 2015. One of the findings was that banks run the risk of being seen as a 'utility' to their customers. Could the same thing happen in China?

You would be forgiven for missing the news with most of the focus this week on Shanghai's never ending stock market run or the latest mention of liberialization and opening in the bank card clearing market, but now it appears that the insurance industry will be the next segment of China's transforming financial industry to be opened up to competition.

It appears, as the WSJ reported, that the implementation of China's controversial banking technology rules has been paused for the moment. But what can we expect in the future?

China's P2P industry, which is technically a shadow banking / lending channel, continued its explosive growth in 2014 as 1,200 new platforms launched and transaction volumes grew 2.39 times as compared to 2013. At the same time the number of platforms suffering serious problems was 275, up 260% from the year before.

Chinese investors continue to join the market rally at an unprecedented pace. Records were broken as 1.6 million accounts were opened from March 23rd and March 27th and only slightly less in the following week – 1.5 million...more than the population of a small city..., well a small city outside of China.

Talked about for many years, one of the key reforms in China's outsized and ambitious plan is the launch of the deposit insurance program. An announcement yesterday confirmed that the program will finally launch in May.

Shanghai based Lufax, one of China’s biggest P2P platforms, has just received a USD 483 million-worth investment from foreign institutional and private investors. Is the investment rearranging deck-chairs on a sinking ship or a clear signal that everything is fine in the troubled P2P industry?

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