Financial Services Talking Points | 30-11-2016

FinancialsTPBIn today’s talking points: China to make financial markets easier to access; China’s central bank remains neutral on commercial bank home loans; China’s battle against sinking currency; Mobile and online platforms a key to target Chinese consumers

China to make financial markets easier to access

Plans have been unveiled by Beijing to allow investors direct access to financial markets, encouraging investment in Chinese stocks and bonds. US investors are being offered a quota of 250 billion yuan ($38 billion) to buy the stocks and bonds. The US firms can be expected to receive licenses before the end of the year. The move comes at a time when Beijing has been attempting to encourage foreign investment to strengthen growth and create jobs as China, the world’s second-largest economy flags after a long boom. The investment quota is part of a new Chinese program which allows approved fund managers overseas to use yuan raised in foreign markets to invest in Chinese financial markets. The program is expected to benefit both the US and China.

Read more at The Wall Street Journal

China’s central bank remains neutral on commercial bank home loans

While the country steps up efforts to rein in house prices, China’s central bank has confirmed that it has not banned commercial banks from issuing personal home mortgage loans. A report, which recently claimed that some banks had been required by the central bank to go so far as to suspend home mortgage loans was denied. However, in Shanghai, both down payment and loan interests will be increased as well as banks ordered to lower the amount of loans they give out. For second-time borrowers, banks have also been ordered to raise interest rates by 10 percent for the Housing Provident Fund, and the maximum amount people can borrow has been dropped by 100,000 yuan.

Read more at Xinhua News

China’s battle against sinking currency

China is considering tougher measures on cross-border capital movements to stem further depreciation of the country’s currency, especially taking an aim at yuan outflows. Previous policies have been mainly targeting foreign exchange outflows, mostly in dollars. Companies have worked around these regulations by moving yuan funds overseas and converting them into dollars in offshore markets. China wants to plug this loophole as part of a broader effort to prevent further devaluation of RMB. RMB’s onshore exchange rate has fallen drastically over the past year, while the country’s foreign exchange reserve has shrunk to US$3.12 trillion in October from an all-time high of $3.99 trillion in June 2014, which is partly because of the government’s need to sell dollars for RMB in markets to bring up the RMB’s value.

Read more at Caixin

Mobile and online platforms a key to target Chinese consumers

Chinese consumer’s take-up of mobile and online platforms has been extraordinary. 53 percent of Chinese tourists coming to Australia book their holiday via mobile device; e-commerce has skyrocketed in China, where 1 billion packages in 2007 grew to 10 billion in 2014; a growing number of restaurants do not have printed out menus but provide a tablet pc; “internet hospital” like the one launched in Fujian in August, connects with hospitals across China, allowing patients to be examined without having to go to a bricks-and-mortar hospital. Australian companies who seek Chinese consumers need to put technology investment in mobile a high priority.

Read more at Financial Review