Financial Services Talking Points | 23/08/2017

In today’s talking points: China’s SOE reforms continue with milestone China Poly merger; China’s foreign investment restrictions could hurt Australia’s first home buyers; Australia follows Japan in move to regulate bitcoin; Dollar lifts further against USD

China’s SOE reforms continue with milestone China Poly merger

China Poly Group, a conglomerate on the Fortune Global 500 list, has merged with Sinolight Corp and China National Arts and Crafts Group (CNACG) in the continuing trend of streamlining China’s State-Owned Enterprises (SOE) to increase their efficiency and competitiveness. With previous mergers often being in the upstream and downstream sectors, China Poly Group’s merger represents a milestone with the two smaller firms having smaller assets and overlapping businesses. The deal was described as being similar to “big fish eating smaller fish”, and may further reduce the resistance of SOEs to reform according to Li Jin, the chief researcher at the China Enterprise Research Institute.

Since late 2012, China has completed mergers among 30 central SOEs, and the total number of central SOEs has been drastically cut to 99, down from 196 in 2003.

Read more at: China Daily


China’s foreign investment restrictions could hurt Australia’s first home buyers

China’s recent foreign investment restrictions would further reduce the number of Chinese developers in Australia’s real estate market, possibly putting increased pressure on property prices, according to the chief economist of Nerida Conisbee. China’s government stated that it hopes to promote the “rational, orderly and healthy development of foreign investment while effectively guarding against risks”. A reduction in Chinese investment could impact the supply side of the market, meaning that the slowdown in property prices may not stabilise as hoped, making it even more difficult for first home buyers to enter the property market.

Chinese investment has already shown signs of a downward trend, with the percentage of sales of Australian development sites to Chinese firms dropping from approximately one third last year to 11 percent this year.

Read more at:


Australia follows Japan in move to regulate bitcoin.

In the wake of a financial scandal involving one of Australia’s biggest banks, The Commonwealth Bank of Australia, Australia has decided to regulate digital currencies such as bitcoin. Under reforms published on Thursday, Canberra would bring digital currency exchanges under remit of Austrac, Australia’s financial crime fighting agency. New legislation would also bolster investigation and enforcement powers of Austrac, which earlier this month initiated a civil legal action against CBA. Australia’s move to regulate cryptocurrencies, including bitcoin, follows a similar move by Japan. Any “alternative coin” exchange or money transfer business that wants to operate must come under the regulatory supervision of the Japan Financial Services Agency by October 1.

Read more at.


Dollar lifts further against USD

The Australian dollar has extended its gain against its US counterpart as the greenback weakened. “Positive momentum could take the AUD above 0.7960 today if the USD remains depressed.” The local currency is also higher against the yen but lower against the euro. Westpac’s Imre Speiz said the offshore session had been a quick session, but both the US dollar and Treasuries (bonds) had fallen despite a lack of news. Currently, the Australian dollar buys 86.52 Japanese yen, from 86.39 and 67.22 euro cents, from 67.48 euro cents.

Read more at: