Financial Services Talking Points | 27/09/2017

In today’s talking points: China responds to debt rating cut; China Guangfa Bank Launches its own “robot-adviser”; Sources point to the creation of financing company to be controlled by the Chinese Government; Australia ranked as the second largest alternative finance market in the Asia Pacific.

China responds to debt rating cut

China has fired back at an international rating agency’s decision to lower the country’s long-standing sovereign credit rating. Standard & Poor’s downgrading – from AA- to A+ — comes just months after another agency, Moody’s, slashed China’s rating to A1.S&P, an American financial services company, cited increased “economic and financial risks after a prolonged period of credit growth” for its move.

China’s finance ministry have labelled it as the “wrong decision,” saying the agency was “neglecting China’s sound economic fundamentals and development potential,” according to the South China Morning Post. S & P’s downgrading of China was the first since 1999.

Read more at: South China Morning Post


China Guangfa Bank launches its own “robot-adviser”

A Chinese commercial bank has unveiled its own so-called “robot-adviser” to offer algorithm-based portfolio advice to individual investors. In what marks the latest advance in the growing artificial intelligence market, China Guangfa Bank says it launched its “computerised investment advisory service” on a database of 4000 private investors and fund market researchers, following a trial. CGB’s vice-president Zong Lexin said the robot-adviser recommends funds, acts as an investment adviser, and will also provide “risk alerts, help adjust plans and remind of profit and loss”. Last year, Credit-Ease Wealth Management Co Ltd launched its own computerised investment advisory service aimed at investors with “small to medium-sized assets”.

Read more at: China Daily


Sources point to the creation of financing company to be controlled by the Chinese Government

Per anonymous sources, a centrally controlled financing company will be created by the Chinese government to supervise the finance arms of State Owned Enterprises (SOEs). The company, already approved by the State Council, will oversee the non-financial central SOE finance companies’ investments, allowing for a fuller picture of how these companies are using funds. The specifics of the operation and regulation of the new company is unclear, but the strategic goal is to make it more efficient for SOEs to borrow money and to cut operational costs, as well as cracking down on public sector debt as SOEs continue to deleverage.

Read more at: South China Morning Post


Australia ranked as the second largest alternative finance market in the Asia Pacific

A joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies has found that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US $609.6 million. Australia has since leap-frogged Japan to become the second largest alternative lending market (behind China) across the Asia-Pacific. Australia’s fintech industry, including invoice financing, balance sheet lending, peer-to-peer lending and crowdfunding contributed to the nation’s strong economy and the needs of growing small and medium-sized businesses.

Read more at: Finextra