This daily digest will focus on market sentiment, new developments in China’s foreign exchange policy, changes in financial market regulations, and broader economic coverage in order to keep the DailyFX reader up-to-date on news typically covered only in Chinese-language sources.
-Chinese media has taken a mixed tone on the outlook for Chinese equities.
- The wealth inequality continues to widen: the top 1% of Chinese residents owns over 1/3rd of Chinese Wealth.
- China’s foreign exchange regulator said that there are no restrictions on individuals purchasing foreign exchange under current policy.
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Market Sentiment
Sina News: China’s most important online media source, similar as CNN in the US. Also owns a Chinese version of Twitter, called Weibo, with around 200 million active usersmonthly
Comments on the Stock Market:
- Positive tone (on theoutlook): 0 headline, 6 general pieces.
- Neutral tone (facts & discussion): 2 headlines, 4 general pieces.
- Negative tone (on the performance & outlook): 1 headline, 2 general pieces.
Overall tone: Neutral to Positive
Hexun News: Chinese leading online media of financial news
Comments on the Stock Market:
- Positive tone (on the performance & outlook): 0 headline, 4 general pieces.
- Neutral tone (facts & discussion): 4 headline, 7 general pieces.
- Negative tone (on the performance & outlook): 0 headline, 2 general pieces.
Overall tone: Neutral
Sohu News: Chinese top three online media
Comments on the Stock Market:
- Positive tone (on the performance & outlook): 0 headlines, 4 general pieces.
- Neutral tone (facts & discussion): 0 headline, 6 general pieces.
- Negative tone (on the performance & outlook): 4 headline, 2 general pieces.
Overall tone: Neutral to Negative
Headline News
Sina News
- The economic inequality in China continues to worsen according to a China Family Panel Studies report released recently. The top 1% of the Chinese population now owns approximately 1/3rd of the total wealth in China. The poorest 25% of the population, however, only has 1% of China’s wealth. Chinese income Gini ratio has risen from 0.3 in the 1980’s to 0.49 in 2012, far above the 0.4 threshold level. Gini ratio is the most commonly measure of inequality, ranging from 0 (perfect equality) to 1 (perfect inequality). This disparity is also seen in the widening in the education and health care resources available to the wealthy and the poor.
- Both Shanghai and Shenzhen stock exchanges said they’re keeping a close eye with tight controls on big shareholders reducing their holdings. Since the revised policy on big shareholders was introduced on Jan 7, only three big shareholders have reduced their stakes. The total amount of the three transactions is not significant and thus has had little-to-no impact to the secondary market.
SAFE: Foreign Exchange Regulator
- SAFE confirmed that China has officially joined Coordinated Portfolio Investment Survey (CPIS) system conducted by IMF and a survey system run by InternationalBankingStatistics. The regulator will publish data on its external portfolio investment as well as banks’ outstanding external assets and liabilities. The first reports will be announced soon. Joining international-recognized surveys will help China to improve the quality and accuracy of the data it reports.
- The foreign exchange regulator refuted the rumor that individual purchase on the foreign exchange will be restricted due to increasing demand. Currently, Chinese individuals over 18- years old are allowed to purchase $50,000 US dollars or an equal amount of another currency each year without specifying any specific reasons. SAFE clarified that there is no restriction on the purchase of, nor is there a reduction in the amounts previously specified, despite the fact that China faces an outsized drop in the foreign currency reserves.
China Forex Magazine: Administrated by SAFE
- Taiwan Futures Exchange (TFE) announced plans to issue options on Yuan exchange rates this June. It will be the first exchange in Asia to trade Yuan option products. TFE started the Yuan (CNH) futures in July 2015 and became one of the eight exchanges trading such products. The other seven exchanges are CME, CME Europe, Singapore Exchange, Hong Kong Stock Exchange, Johannesburg Stock Exchange, the Brazilian Mercantile Exchange and the Moscow Stock Exchange.
Hexun News:
- China Securities Regulatory Commission (CSRC) released a list of the four new RMB Qualified Foreign Institutional Investors (RQFII) that were approved in December. RQFII is a program that allows foreign institutions to purchase securities within mainland China. Through this program, foreign traders and investors are able to more involve in Chinese domestic markets.
Written by Renee Mu, DailyFX Research Team
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