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Regulatory News

1. The central bank cuts interest rates by 10 basis points

On July 22, the central bank officially announced that the National Interbank Funding Center announced this month's loan market quotation rate (LPR). Among them, the 1-year LPR is 3.35%, and the LPR for more than 5 years is 3.85%, both down 10 basis points. It is worth noting that the LPR for more than 5 years, which is closely related to housing loans, has fallen for the second time this year.

Li Zhan, chief economist of the research department of China Merchants Fund, believes that this move can increase financial support for the real economy and reduce the financing costs of the real economy; secondly, the LPR reform has taken the first step: the LPR pricing reference standard has gradually been adjusted from pegging to the 1-year MLF interest rate to pegging to the 7-day OMO interest rate; finally, it is to stabilize the bank's net interest margin. As of the end of the first quarter of 2024, the net interest margin of commercial banks was 1.54%. After the previous regulatory authorities rectified the illegal manual interest payment, the cost of the bank's liability side has been reduced. In addition, the central bank has once again lowered the 1-year LPR by 10 basis points and the OMO policy rate by 10 basis points. According to the deposit interest rate self-discipline adjustment mechanism, the deposit interest rate of commercial banks is expected to be further reduced, thereby continuing to support the reduction of loan interest rates on the asset side of banks, to a certain extent offsetting the impact of interest rate adjustments and further stabilizing the net interest margin of commercial banks.

2. Central Bank: 1.183 trillion yuan of reverse repurchases will mature in the open market

Wind data shows that from July 13 to July 19, the central bank conducted 1.183 trillion yuan of reverse repurchase operations, and due to the maturity of 10 billion yuan of reverse repurchase, the net injection for the whole week was 1.173 trillion yuan. In addition, the central bank also conducted 100 billion yuan of MLF and 70 billion yuan of treasury cash deposit operations during the week, and 103 billion yuan of MLF matured. Therefore, based on the full-caliber calculation, the net injection for the whole week was 1.24 trillion yuan.

From July 20 to July 26, the central bank's open market will have 1.183 trillion yuan of reverse repurchases due, of which 129 billion yuan, 676 billion yuan, 270 billion yuan, 49 billion yuan, and 59 billion yuan will mature from Monday to Friday, respectively. In addition, 70 billion yuan of treasury cash deposits will mature next Wednesday (July 24); and 5 billion yuan of central bank bill swaps will mature next Thursday (July 25).

III. CSRC: Persist in using reform to resolve deep-seated contradictions and problems that hinder the stable and healthy development of the capital market

According to the official website of the China Securities Regulatory Commission, Wu Qing, Secretary of the Party Committee and Chairman of the China Securities Regulatory Commission, presided over a meeting of the Party Committee (enlarged) to convey and study the spirit of the Third Plenary Session of the 20th CPC Central Committee and study implementation measures. This plenary session made clear arrangements for comprehensively deepening capital market reform. The China Securities Regulatory Commission system must consciously adhere to and maintain the centralized and unified leadership of the Party Central Committee over the work of the capital market, closely focus on the central task of promoting Chinese-style modernization, firmly grasp the hard truth of high-quality development in the new era, highlight the strengthening of the foundation, strict supervision and strict management, adhere to reform to help stability, promote development, improve services, and strengthen the team, and unswervingly push forward the comprehensive deepening of capital market reform.

First, we must persist in using reform methods to resolve the deep-seated contradictions and problems that hinder the stable and healthy development of the capital market and enhance the inherent stability of the capital market.

The second is to further enhance the capital market’s inclusiveness and adaptability to scientific and technological innovation, cultivate and expand patient capital, do a good job in the “five major articles” of finance, and guide more resources and factors to gather towards new quality productivity.

The third is to improve the institutional mechanisms of strong and strict supervision, strengthen full-chain supervision of listed companies, vigorously strengthen investor protection, and strengthen regulatory accountability.

Fourth, coordinate development and security, implement requirements for early identification, early warning, early exposure, and early disposal of risks, improve risk prevention and mitigation mechanisms in key areas such as bond defaults, private placements, and trading venues, and maintain the safe operation of capital market infrastructure.

Fifth, we must turn the knife inward and carry out self-revolution, do a solid job in rectifying the central inspection, deepen the study and education of party discipline, unswervingly rectify the work style, enforce discipline and fight corruption, and build an iron team of supervision.

IV. China Securities Association: Proposes to improve the public disclosure mechanism for negative evaluation of insurance agents and add Category D (Suspended Business) to the classification list

The "Securities Firm Underwriting Business Rules" may undergo major revisions, with plans to improve the mechanism for publicizing negative comments about sponsors.

It is reported that the China Securities Association is soliciting opinions from sponsors on the "Securities Company Sponsorship Business Rules", and the feedback deadline is July 29. Compared with the 2022 version, the focus of this adjustment is to improve the negative evaluation disclosure mechanism for sponsor representatives.

On the one hand, the classification list A of sponsor representatives (comprehensive practice information) will be adjusted, and the information on projects withdrawn or rejected by sponsor representatives will be added to the original list.

On the other hand, a new classification list of sponsor representatives D (suspended business category) has been added, which publishes the names of sponsor representatives who have been subject to administrative penalties by the CSRC in the past three years, as well as those who have been subject to administrative supervision measures such as being determined as inappropriate candidates by the CSRC or temporarily not accepting documents related to administrative licenses, or those who have been subject to disciplinary sanctions such as being determined by industry self-regulatory organizations as unsuitable to engage in related businesses or temporarily not accepting signed documents or temporarily not accepting related business documents, and are in the execution period.

5. China Securities Association: As of the end of June, the net asset value of public funds totaled 31.08 trillion yuan

On July 22, the China Securities Investment Fund Association released the latest public fund market data, showing that by the end of June 2024, there were 163 public fund management institutions in my country, including 148 fund management companies and 15 asset management institutions with public fund qualifications. The net asset value of the public funds managed by the above institutions totaled 31.08 trillion yuan.

Specifically, as of the end of June, the net asset value of closed-end funds totaled 3857.052 billion yuan, and the net asset value of open-end funds totaled 27225.586 billion yuan. Open-end funds include five categories: stock funds, mixed funds, bond funds, money market funds, and QDII (Qualified Domestic Institutional Investors) funds. As of the end of June, the scale of the above five categories of funds was 3.10 trillion yuan, 3.55 trillion yuan, 6.89 trillion yuan, 13.19 trillion yuan, and 0.50 trillion yuan, respectively.

6. One month after the implementation of the “Eight Measures for the Science and Technology Innovation Board”, the Shanghai Stock Exchange launched more than 30 support and optimization measures

In the one month since the release of the "Eight Measures for the Science and Technology Innovation Board", the Shanghai Stock Exchange has proposed more than 30 support and optimization measures in eight aspects, including supporting the listing of hard technology companies on the Science and Technology Innovation Board, optimizing the issuance and underwriting system, refinancing, mergers and acquisitions, index products and market ecology. These measures are closely related to listed companies, intermediary institutions, venture capital institutions, fund companies and public investors.

In addition, the Shanghai Stock Exchange has organized nearly 10 seminars and training sessions to promote the market, covering about 100 Sci-Tech Innovation Board listed companies, 25 securities companies, 9 venture capital institutions, and 25 fund companies. A number of typical cases have been implemented in terms of initial public offerings, mergers and acquisitions, and product innovation.

In terms of IPO review, on June 20, the Shanghai Stock Exchange accepted the initial public offering application of Xi'an Taijin New Energy Technology Co., Ltd., which is the "first accepted enterprise" of the Science and Technology Innovation Board since 2024.

In terms of mergers and acquisitions and restructuring, on July 16, the application of Precision Electronics to issue shares to purchase assets has been registered and effective by the China Securities Regulatory Commission, and it took only two months from acceptance to registration and effectiveness.

In terms of index investment, the Shanghai Stock Exchange and China Securities Index Co., Ltd. stated that they will release the Shanghai Stock Exchange Science and Technology Innovation Board Chip Design Theme Index and the Shanghai Stock Exchange Science and Technology Innovation Board Semiconductor Materials and Equipment Theme Index on July 26 to provide investors with more diversified investment analysis tools.

new product release

1. Fidelity China Bond 0-2 Year Policy Financial Bond Index Securities Investment Fund is being issued

Fidelity China Bond 0-2 Year Policy Financial Bond Index Securities Investment Fund (A: 020996, C: 020997) is being issued, and the planned fundraising period is July 17, 2024 to July 29, 2024. The fund manager of the fund is Fidelity Fund Management (China) Co., Ltd.

The fund contract shows that the fund mainly invests in the constituent bonds and alternative constituent bonds of the underlying index, and its risk-return characteristics are similar to those of the bond market portfolio represented by the underlying index. The fund's performance benchmark is the ChinaBond 0-2 Year Policy Financial Bond Index Yield * 95% + Bank Current Deposit Rate (after tax) * 5%.

The proposed fund manager is Cheng Hao, deputy director of the fixed income department of Fidelity Fund Management (China) Co., Ltd., with a master's degree in engineering from Shanghai Jiao Tong University. He joined Fidelity Funds in November 2021. He was formerly an investment manager and fixed income researcher at Fidelity Litai Investment Management (Shanghai) Co., Ltd. Mr. Cheng Hao has also served as a director of the Shanghai Branch of Fitch (Beijing) Credit Rating Co., Ltd., an analyst at Fortune Lyon Securities Co., Ltd. (now renamed Shanghai Huaxin Securities Co., Ltd.), an analyst at BNP Paribas Capital Shanghai Office, and an assistant consultant at A.E.K. Consulting Co., Ltd. He is currently the fund manager of Fidelity Yuda Pure Bond Securities Investment Fund. He is currently the fund manager of Fidelity China Bond 0-2 Year Policy Financial Bond Index Securities Investment Fund.

2. Bodao and Yuyuan Multi-Purpose Stable 30-Day Holding Period Bond Securities Investment Fund will be issued soon

Bodao Heyu Multi-Purpose Stable 30-Day Holding Period Bond Securities Investment Fund (A: 021323, C: 021324) is about to be issued, and the planned fundraising period is from August 1, 2024 to August 16, 2024. The fund manager of the fund is Bodao Fund Management Co., Ltd.

The fund contract shows that the fund is a contractual open-ended, bond-type securities investment fund. The proportion of the fund's investment portfolio is that the proportion of investment in bond assets is not less than 80% of the fund's assets, the proportion of investment in stocks, exchangeable bonds and convertible bonds (including separated convertible bonds) assets is not more than 20% of the fund's assets, and the assets invested in Hong Kong Stock Connect target stocks account for 0%-50% of the stock assets. At the end of each trading day, after deducting the trading margin required for treasury bond futures contracts, the proportion of cash retained by the fund or invested in government bonds with a maturity date of less than one year shall not be less than 5% of the net asset value of the fund. The cash referred to by the fund does not include settlement reserves, deposited margins and receivable subscription funds.

The proposed fund manager is Chen Lianquan, a master of economics. He joined Bodao Fund Management Co., Ltd. in December 2021 and is currently the director of fixed income investment. He has been the fund manager of Bodao Shengli 6-month holding period mixed securities investment fund since February 9, 2022, the fund manager of Bodao Herui Multi-dimensional Stable 6-month holding period mixed securities investment fund since October 25, 2022, the fund manager of Bodao Hexiang Multi-dimensional Stable Bond Securities Investment Fund since April 11, 2023, and the fund manager of Bodao CSI Interbank Deposit Certificate AAA Index 7-day Holding Period Securities Investment Fund since October 24, 2023.