Financial Services Talking Points | 30/03/2018

In Today’s Talking Points: China’s Top Banks Perform Strong, Take Home Bigger Profits; China Steps Up Its Efforts to Avoid a Trade War with the US;’s Finance Arm Looking to Raise $1.9 Billion in fresh equity at a $20 Billion Valuation; Walmart switches to Tencent’s WeChat pay from AliPay in Western China

China’s Top Banks Perform Strong, Take Home Bigger Profits Year-on-year

China’s top 5 lenders raked in bigger annual profits, likely due to Beijing’s crackdown on shadow financing and high leveraging, making core banking services much more profitable. Over the past decade, smaller and mid-sized banks had been raking in high profits due to an aggressive lending strategy pushed through shadow-banking channels. These results suggest that Beijing has been successful in shifting the tide from these small and mid-sized banks back to core banking initiatives. ICBC Chairman Yi Huiman said that due to a strong macroeconomic environment and improving loan qualities, asset quality will continue to improve. To add to this, earlier this month regulators cut the reserve requirements for commercial banks, likely giving a boost to banks’ balance sheets.

Read more on Reuters

China Steps Up Its Efforts to Avoid a Trade War with the US

Chinese officials are rushing to implement a new set of regulations in the next month aiming to avoid a race-to-the-bottom trade war with the US following the imposition of tariffs by the US. The new regulations will allow foreign financial groups to become majority stakeholders in Chinese domestic securities companies. Beijing has also offered to buy more semiconductors from the US by diverting some purchases from South Korea and Taiwan, aiming to reduce the trade surplus with the US. The new regulations were originally slated to be implemented by the end of June, however due to the US accelerating its tariffs schedules, Beijing is rushing to implement them sooner. China is also considering removing restrictions on foreign ownership in a host of other industries, including the telecommunications, medical and education sectors.

Read more on The Financial Times’s Finance Arm Looking to Raise $1.9 Billion in fresh equity at a $20 Billion Valuation

The finance arm of – China’s second largest e-commerce firm is looking to raise 12 billion RMB ($1.9 Billion USD) at a $20 billion USD valuation, potentially doubling its value from last year. The firm is looking to diversify and deepen its push into industries such as securities, banking and insurance. The move follows heightened activity by Chinese technology firms responding to increasing demand for digital services – particularly in the financial sector. JD Finance mainly offers online financial services and products including wealth management and consumer credit – a strategy that the new round of fund raising looks to change.

Read more on CNBC


Walmart switches to Tencent’s WeChat pay from AliPay in Western China

The US behemoth retailer Walmart has made the switch from AliPay in favour of Tencent’s WeChat Pay, dealing a blow to Alibaba in the fight to dominate China’s 15 Trillion USD payment market. Walmart, one of the largest foreign retailers in China had previously accepted AliPay in its 400 stores, however it announced this month that it had gone into partnership with WeChat. Alibaba remains the industry leader in the payments market, however Tencent is catching up quickly, forming partnerships with Starbucks coffee across China and other foreign stores. Representatives from Walmart declined to comment on the motivations for the switch.

Read more on Financial Times