The pace at which China is announcing deleveraging reforms has taken markets by surprise. Below is a list of its most significant moves:
Chinese authorities order Beijing-based cryptocurrency exchanges to stop trading and immediately notify users of their closure, in a move aimed at limiting risks in the widely speculative market.
Economists and cryptocurrency advocates say the move was also aimed at closing an avenue used to evade Beijing’s capital controls.
China’s central bank chief, on the sidelines of the Communist Party Congress, warns of the risks of a “Minsky moment”, referring to a sudden collapse in asset prices after long periods of growth, sparked by debt or currency pressures.
At the congress, President Xi Jinping flags debt as one of the three key risks to Chinese stability along with corruption and pollution.
China says it will raise foreign ownership limits in financial firms a day after U.S. President Donald Trump reiterated calls for better access to Chinese markets in meetings with Xi.
Foreign financial firms are still small players in the financial sector, and the sheer size of the market is a big lure for overseas players.
China’s central bank issues sweeping guidelines to tighten rules on asset management to fend off systemic risks in the rampant shadow banking sector.
The new rules aim to close loopholes that allow regulatory arbitrage, reduce leverage levels and rein in shadow banking activity.
They will cap the total assets to net assets ratio at 140 percent for open mutual funds and 200 percent for private funds. Investors will be prohibited from pledging their shares in asset management products as collateral to obtain financing.
The central bank also said financial institutions must break the practice of providing investors with implicit guarantees against investment losses.
The transition period for the new regulations lasts until June 30, 2019.
Chongqing Iron & Steel Co says its creditors have voted to accept a debt-for-equity swap to restructure nearly 40 billion yuan ($6.04 billion) in debts.
Chongqing Steel’s debt plan will see the company pay in cash portions of claims up to and including 500,000 yuan, and issue new shares for the portions of claims exceeding that level.
Lenders will receive new shares at 3.68 yuan per share, a 71 percent premium to their last traded price in Shanghai.
As China steps up its campaign to reduce financial risk, more state-owned enterprises may be forced to restructure debts, with “non-systemic” local SOEs expected to face more financial strain in the months ahead, some analysts say.
A top-level Chinese government body issues an urgent notice to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders. The crackdown on micro-lenders comes as authorities warn about rising household debt.
Source: Reuters (Compiled by Marius Zaharia)