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Compiled by Wu Shuang and intern Zhu Yiqiao from 21st Century Asset Management Research Institute

I. Regulation and Policy

1、my country will formulate a financial law to bring all financial activities under supervision according to law

On July 21, the full text of the "Decision of the CPC Central Committee on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision"), which was reviewed and approved by the Third Plenary Session of the 20th CPC Central Committee, was officially announced. In Article 18 of the "Deepening Financial System Reform", an important financial legislative task is mentioned - "Formulating a Financial Law". "The financial law to be issued in the future may be a comprehensive legislation with the nature of a basic law." Xiao Jing, an associate researcher at the Institute of Law of the Chinese Academy of Social Sciences, said in an interview with a reporter from 21st Century Business Herald, "The financial law that the Third Plenary Session of the 20th CPC Central Committee clearly proposed to formulate should be an important legislation with codification significance based on the integration of existing financial laws and regulations."

2. The central bank issued detailed implementation rules for the supervision of non-bank payment institutions

On July 26, the People's Bank of China issued the "Implementation Rules for the Regulations on the Supervision and Administration of Non-Bank Payment Institutions" (hereinafter referred to as the "Implementation Rules"). As an important departmental regulation supporting the "Regulations on the Supervision and Administration of Non-Bank Payment Institutions" (hereinafter referred to as the "Regulations"), the "Implementation Rules" stipulate that the transition period for each non-bank payment institution is from the date of implementation of the "Implementation Rules" to the expiration date of its payment business license. If the transition period is less than 12 months, it shall be calculated as 12 months. Among them, the "Implementation Rules" clarify the application materials, handling procedures and time limit requirements for administrative licensing matters related to payment institutions, stipulate payment business license management, branch filing and other matters; refine the payment business classification method and the connection relationship between the old and new classifications, system completeness, and the requirements for the daily average balance ratio of net assets and reserves; clarify the applicable procedural provisions for major matters and risk event reporting, law enforcement inspections, etc., and strengthen the equity penetration supervision of payment institutions.

3. SHFE reported abnormal trading in the first half of the year and revised relevant management measures intensively

On July 25, the Shanghai Futures Exchange (hereinafter referred to as SHFE) released the "2024 First Half Regulatory Information Notice" (hereinafter referred to as the "Notice"). In the "Notice", the SHFE specifically announced the handling of abnormal trading behaviors and clues of suspected illegal transactions; and made clear instructions on further strengthening customer account opening and trader account management. Before the release of the above-mentioned "Notice", the SHFE issued the "Abnormal Trading Behavior Management Measures (Revised Version)" (hereinafter referred to as the "Abnormal Trading Behavior Management Measures"), which aims to regulate futures trading behaviors and maintain the order of the futures market. The reporter noticed that in addition to the SHFE, the Zhengzhou Commodity Exchange (hereinafter referred to as ZCE) and the Dalian Commodity Exchange (hereinafter referred to as DCE) also issued relevant amendments to the "Abnormal Trading Behavior Management Measures" revision notice.

4. The CSRC approved the suspension of securities lending business in accordance with the law to further strengthen the counter-cyclical regulation of securities lending

On July 22, in order to effectively respond to investors' concerns and maintain the stable operation of the market, after fully evaluating the current market situation, the China Securities Regulatory Commission approved China Securities Finance Corporation's application to suspend the securities lending business in accordance with the law, which will be implemented from July 11, 2024. Existing securities lending contracts can be extended, but must be settled no later than September 30. At the same time, the securities exchanges were approved to increase the margin ratio for securities lending from no less than 80% to 100%, and the margin ratio for private securities investment funds participating in securities lending from no less than 100% to 120%, which will be implemented from July 22, 2024.

5. CSRC: Study and plan a package of measures to further deepen the reform and opening up of the capital market

On July 26, the China Securities Regulatory Commission issued a document stating that in order to thoroughly study and implement the spirit of the Third Plenary Session of the 20th CPC Central Committee and further comprehensively deepen the reform of the capital market, Wu Qing, Secretary of the Party Committee and Chairman of the China Securities Regulatory Commission, recently held a special symposium in Beijing, and had in-depth exchanges with representatives of 10 foreign-funded securities, funds, futures institutions, QFII institutions, etc. in China, and fully listened to their opinions and suggestions. Li Chao, member of the Party Committee and Vice Chairman of the China Securities Regulatory Commission, participated in the symposium. During the symposium, all parties put forward specific opinions and suggestions on the next step of comprehensively deepening the reform of China's capital market, including promoting the coordinated development of investment and financing, further enhancing the institutional inclusiveness and accuracy of scientific and technological innovation and new quality productivity; taking multiple measures to activate the M&A and restructuring market, supporting the transformation and upgrading of listed companies and improving their quality; vigorously developing the private equity venture capital market, cultivating more long-term funds and patient capital; orderly expanding the institutional opening of the capital market, and improving the investment convenience of foreign institutions.

6. CSRC "guides more resource elements to gather towards new quality productivity"

Recently, the China Securities Regulatory Commission held a Party Committee (expanded) meeting to convey and study the spirit of the Third Plenary Session of the 20th CPC Central Committee and study implementation measures. The meeting emphasized that more resource elements should be guided to gather towards new quality productivity. The China Securities Regulatory Commission stated that the capital market is a product of reform and is also growing and developing in the reform. 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 the use of reform to help stability, promote development, improve services, and strengthen the team, and unswervingly push forward the comprehensive deepening of capital market reform.

7. Guangdong Securities Regulatory Bureau launches 2024 self-examination of private placements

In order to strengthen the daily supervision and risk prevention of private investment funds in Guangdong, the Guangdong Securities Regulatory Bureau decided to organize the 2024 private equity fund self-examination from July 22 to August 31. The scope of the self-examination is the private equity fund management institutions registered in Guangdong Province (excluding Shenzhen) as of June 30 and registered with the Asset Management Association of China. The key points of the self-examination include: whether the private equity fund management institutions are compliant in the business links such as publicity and promotion, fund raising, investment operation, whether the registration, filing, information submission, and information disclosure are true, accurate, complete, and timely, whether the internal management and risk control are perfect, whether there are fund products overdue, whether quantitative trading is carried out, whether there are off-site operations, whether there are situations that cannot continue to meet the registration and filing conditions, and whether they are engaged in businesses that conflict with or are unrelated to private equity fund management.

8. Qingdao Financial Regulatory Bureau: Guidance on the High-quality Development of Pension Finance will be issued in the near future

The Qingdao Regulatory Bureau of the State Financial Supervision and Administration Bureau (hereinafter referred to as the Qingdao Financial Regulatory Bureau) held its first press conference on July 22. Guan Ying, director of the Personal Insurance Department of the Qingdao Financial Regulatory Bureau, revealed at the meeting that the Guiding Opinions on the High-Quality Development of Pension Finance (hereinafter referred to as the Guiding Opinions) will be issued in the near future and are currently in the process of issuing documents. At present and in the future, the development of pension finance in Qingdao will focus on the following four directions: First, pension finance with pension reserves and management as the main content; second, pension service finance that is connected with medical insurance, health management, and pension wealth management for the elderly; third, pension industry finance that provides investment and financing services for the pension industry, health industry, and silver economy; fourth, convenient support for the purpose of improving the financial service experience of the elderly.

2. Industries and Institutions

Personnel changes:

-On July 26, China Merchants Asset Management released an announcement on senior management changes. Yi Weidong, former general manager of the custody department of China Merchants Securities, was appointed as the general manager of China Merchants Asset Management, with the appointment date being July 24. Yang Yang will no longer serve as the general manager of China Merchants Asset Management due to work adjustments.

-On July 25, TaiPing Life Insurance's official website released an announcement stating that on April 26, 2024, after being reviewed and approved at the 45th meeting (temporary) of the Seventh Board of Directors, and on July 18, 2024, his qualifications were approved by the State Financial Supervision and Administration (Jin Fu [2024] No. 489), Li Jinsong was appointed as the company's general manager.

-On the evening of July 23, Jiangsu Changshu Rural Commercial Bank issued an announcement stating that the qualifications of the bank's chairman Xue Wen and president Bao Jian have been approved by the regulatory authorities and they have officially taken office.

-On July 23, Hengqin Life Insurance issued an announcement stating that it had recently received the "Reply of the Guangdong Regulatory Bureau of the State Financial Supervision and Administration on Qian Zhonghua's Qualifications" (Yue Jin Fu [2024] No. 186), and the Guangdong Regulatory Bureau of the State Financial Supervision and Administration has approved Qian Zhonghua's qualifications to serve as the company's chairman. Qian Zhonghua will serve as the company's chairman from July 18, 2024.

-On July 23, Xingyin Fund issued an announcement on the change of senior management personnel, stating that the company's general manager and chief information officer Zhao Jianxing resigned due to work transfer. From July 22, the company's chairman Wu Ruoman will perform the duties of general manager. At the same time, Chen Xiaoyi was newly hired as the company's chief information officer.

-On July 22, according to the Central Commission for Discipline Inspection and the National Supervisory Commission’s Discipline Inspection and Supervision Group stationed in the Industrial and Commercial Bank of China and the Hubei Provincial Commission for Discipline Inspection and Supervision: Recently, the Central Commission for Discipline Inspection and the National Supervisory Commission’s Discipline Inspection and Supervision Group stationed in the Industrial and Commercial Bank of China and the Hubei Provincial Supervisory Commission opened an investigation into the serious violations of discipline and law by Wang Zhibin, former Party Secretary and President of the Hubei Branch of the Industrial and Commercial Bank of China.

The deposit interest rates of the six major banks have all "broken 2", and the "seesaw" effect between bank wealth management and deposits has reappeared.On July 25, the six major state-owned banks, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications, and the Postal Savings Bank, respectively announced the latest RMB deposit interest rate table on their official websites, and once again lowered the interest rates of various types of deposits. Judging from the results of the adjustment, except for the slightly higher deposit interest rates of some of the Postal Savings Bank, the reduction ranges of the other banks remained the same. Regarding this reduction, the industry generally believes that it will help banks stabilize interest rate spreads, but it may also promote a larger scale of deposits to "move" to wealth management, and we need to be vigilant about the increased difficulty of attracting deposits. Looking ahead, the experts interviewed believe that other joint-stock banks and small and medium-sized banks are likely to follow suit in deposit interest rate adjustments. At the same time, considering the current pressure on bank net interest margins, imbalances in the deposit market structure, and policy interest rate trends, domestic deposit rates may still be lowered in the future. (21st Century Business Herald)

Which bank has the largest scale of wealth management in the first half of the year? It may be difficult to stop the downward trend of returns.Due to factors such as the end-of-quarter deposit rush, the scale of domestic bank wealth management decreased by more than 900 billion yuan month-on-month at the end of June; as of July 18, according to Puyi Standard data, the scale of bank wealth management has rebounded to 29.4 trillion yuan. Among them, the wealth management subsidiaries of joint-stock banks still occupy the first echelon in terms of wealth management scale. In the first half of the year, due to the overall increase in yields, fixed-income wealth management has become the main force for the expansion of the wealth management market this year. However, since May, according to Puyi Standard data, the overall annualized yield of fixed-income wealth management and bank wealth management (nearly 1 month) has declined month-on-month for two consecutive months; as of the end of June, the annualized yields of both (nearly 1 month) fell below 3%. Analysts believe that as the two major allocation assets of wealth management products, the yields of treasury bonds and deposits have fallen to low levels, and consumers need to lower their expectations for investment returns on wealth management products. With the decline in wealth management performance benchmarks and yields, the growth of wealth management scale is expected to slow down. (Southern Metropolis Daily)

The first batch of bank wealth management second quarter reports were released and overall returns were stable.The second quarterly reports of bank wealth management products have kicked off. Recently, companies such as Everbright Wealth Management, China Merchants Bank Wealth Management and Ping An Wealth Management have taken the lead in disclosing the second quarterly reports of their respective products. From the performance point of view, the overall income of bank wealth management products with bonds as the core investment target is stable, and a good absolute return has been achieved. As for the future market, many bank wealth management professionals believe that in the case of scarcity of high-quality assets, there are still certain opportunities in the domestic bond market, but it is necessary to pay attention to multiple risk points. Judging from the second quarterly report, many equity products of bank wealth management products are quite bright spots, among which products tracking high-dividend and low-volatility indexes have performed well. At the same time, theme products such as REITs, special and new, and ESG have performed well. Looking to the future, many wealth management professionals said that equity assets currently have a good price-performance ratio and need to wait patiently for the opportunity. (Shanghai Securities News)

The fund distribution industry is in turmoil again: China Merchants Bank’s public fund purchase fee rate has been reduced by 10% across the board. How can it find growth opportunities by turning the knife inward?The preferential rates for bank agency sales of funds have been further increased. At the "2024 Wealth Partner Forum" held by China Merchants Bank on July 18, reporters learned that China Merchants Bank's agency sales of public funds will fully implement a 10% purchase fee, covering all online and offline channels, all categories of fund products, and subscription fee types. As the leading institution for bank agency sales of public funds, this move by China Merchants Bank will undoubtedly become a benchmark for the industry. In fact, in the past year since the launch of the public fund rate reform, coupled with the impact of securities companies and independent fund sales institutions, many banks have successively launched phased 10% discounts on some agency sales fund products. At the same time, banks are also facing increasingly prominent pressure on mid-term revenue. "Price war" is certainly not a long-term solution for the bank agency sales dispute. How to find new growth opportunities in the context of capital market fluctuations and declining comprehensive agency product rates is the key to the breakthrough of each bank. (Daily Economic News)

The mid-year performance has improved and the fund has increased its "silver content". As of July 23, three A-share listed banks have disclosed their 2024 interim performance reports, including Qilu Bank, Sunong Bank and Ruifeng Bank. Judging from the disclosed data, the net interest rate growth rate of the three banks exceeded 15%. With the disclosure of the interim performance reports of the three listed banks, the disclosure of the "midterm exam" report cards of listed banks this year has entered the "warm-up time". Guosen Securities released a research report saying that the downward cycle of bank performance growth since 2020 was mainly dragged down by net interest margin. From the perspective of the reasons for the decline in the performance growth rate of listed banks since 2020, the continued sharp narrowing of net interest margin is the main drag factor, and the scale and credit cost have made positive contributions to performance, but the positive contribution of credit cost to performance has continued to decline. It is expected that 2024 will be the end of this round of performance decline cycle, and the current valuation is still at a low level. As it is believed that this round of adjustment will bottom out, the fund increased its position in the banking sector in the second quarter. According to statistics from Ping An Securities, as of the end of the first half of the year, the proportion of actively managed funds, including equity-oriented and stock-based funds, allocated to the banking sector increased by 33BP month-on-month to 2.39%. Given the defensive attributes of the sector and the dividend strategy that leads the market, it is expected to continue to receive more attention from funds. (21st Century Business Herald)

Total assets exceeded 30 trillion yuan! The scale of public funds increased by 1.87 trillion yuan in the second quarter.In the first half of 2024, the asset size of public funds continued to maintain a rapid growth trend, with the total asset size exceeding 30 trillion yuan. According to data from the Public Fund Ranking Network, as of June 30, there were 12,028 public funds in the market, with a total of 29.67 trillion shares and a total asset size of 30.71 trillion yuan. Compared with the end of the first quarter, the number of public funds increased by 276, an increase of 2.35%; the shares increased by 1.81 trillion shares, an increase of 6.49%; the asset size increased by 1.87 trillion yuan, an increase of 6.47%. Money market funds have the largest asset size. Data shows that as of June 30, there were 370 money market funds in the market, with a total of 13.19 trillion shares and a total asset size of 13.19 trillion yuan, accounting for 42.94% of the total assets of all funds. (Xinhua Finance)

Efforts are being made to implement “patient capital”, with state-owned funds and listed companies adopting a “double-spelling” model.Since the Political Bureau of the CPC Central Committee on April 30 this year clearly proposed the strategic deployment of "strengthening patient capital", many departments have successively launched major policies to cultivate patient capital and promote the development of new quality productivity. In order to stimulate the vitality of the venture capital market, in recent years, state-owned assets have become the most important source of funds for the venture capital market. At the same time, listed companies, as representatives of industrial capital, continue to participate in industrial funds. According to statistics from Securities Times reporters, since the beginning of the year, more than 100 listed companies have announced their participation in private equity funds in the form of LPs (limited partners). The number of cases of strong alliances between state-owned platforms and listed companies continues to increase, further enhancing the empowerment effect of patient capital on the industrial chain. (Securities Times)

Primary bond funds are in high demand, and the investment logic of convertible bonds has changed.In the current context of declining bond yields, primary bond funds that can use convertible bonds to enhance returns have entered the field of vision of more investors. According to Choice data statistics, in the second quarter of this year, the total scale of primary bond funds increased by more than 80 billion yuan, an increase of more than 20% from the end of the first quarter. In the view of industry insiders, the returns and volatility levels of primary bond funds are between "fixed income +" funds and pure bond funds, providing investors with more abundant investment options. However, as the credit risk of convertible bonds has received more market attention, its investment logic has changed. Many bond fund managers have also begun to adjust the convertible bond holdings in the portfolio to seize the structural opportunities therein. (Shanghai Securities News)

In June, the scale of private equity management products established by securities and futures companies was 41.037 billion yuan, a year-on-year decrease of 10.96%.Cailianshe reported on July 24 that data from the Asset Management Association of China showed that in June 2024, securities and futures institutions had registered a total of 861 private equity products, a month-on-month increase of 25.51% and a year-on-year decrease of 8.89%; the establishment scale was 41.037 billion yuan, a month-on-month decrease of 21.41% and a year-on-year decrease of 10.96%. As of the end of June 2024, the scale of private equity products of securities and futures institutions totaled 12.72 trillion yuan (excluding social security funds and enterprise annuities), a decrease of 121.565 billion yuan from the end of last month, a decrease of 0.95%. (Cailianshe)

The average settlement rate of universal life insurance has broken through 3%, is there still room for downward movement in the second half of the year? The settlement rate of universal life insurance has broken through 3.According to industry statistics, the average settlement interest rate of more than 1,800 universal life insurance policies in June was 2.97%, a decrease of 42 basis points from the end of last year. The reduction in the settlement interest rate of universal life insurance is not an isolated phenomenon. The decline in the returns of insurance products has radiated to the fields of increasing whole life insurance and dividend insurance. Just after the loan interest rate was lowered on July 22, the market successively heard the news that "the state-owned banks are considering lowering the deposit listing interest rate" and "the life insurance scheduled interest rate is expected to be lowered again." On July 23, an insider of a leading insurance company told reporters that there are still traditional products with a scheduled interest rate of 3% on sale, which may be reduced by the end of August, and there has been no explicit notice. Another insurance broker said that there is no clear news about the reduction of the upper limit of the guaranteed interest rate for dividend insurance and universal insurance, but the reduction is the general trend. (21st Century Business Herald)

These trusts are “out there”! What are the risks?"The funding party takes a fancy to one or some projects. After the two sides have reached an agreement, they set up a trust plan to operate it, and the trust company plays the role of a 'channel'. This is commonly known as 'two ends are outside' in the industry." Jia Jia, a person from a trust company in the northern region, told reporters. According to Li Yuan, a person from a trust company in the eastern region, in the past year, the fastest growing business in the industry was mainly concentrated in the outsourcing of banks and bank wealth management companies. However, recently a number of trust companies have received regulatory notices requiring them to investigate problems, including: cooperating with wealth management companies to use smoothing mechanisms to adjust product returns, cooperating with wealth management companies to trade risky assets between different wealth management products, providing channels for cash management wealth management to illegally invest in low-rated bonds and illegally nested investment deposits, and cooperating with wealth management products to improperly use valuation methods. Industry insiders said that once the regulatory documents are officially issued, trust companies' businesses of this type will be tightened. (China Securities Journal)

3. Market and Data

Bond Market:The bond yields fell smoothly last week. After the OMO, LPR and MLF rate cuts were implemented, the bond yields fell steeply. The 10Y Treasury yield fell 6.7bp to 2.19% on a weekly basis, and the 1Y Treasury yield fell 5.0bp to 1.48%, respectively setting the lowest values ​​in this round of bond yield decline cycle since November 2024. During the interest rate cut last week, the long-term and short-term yields fell by a similar amount, and the 10Y-1Y and 30Y-10Y Treasury spreads were relatively volatile, and the yield curve had no obvious steepening/flattening tendency. (Shenwan Hongyuan Bonds)

Stock Market:Last week, both A-shares and the Hang Seng Index fell, with the Hang Seng Index in the lead. The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index fell by 3.07%, 3.44%, and 3.82%, respectively; in terms of Hong Kong stocks, the Hang Seng Index fell by 2.28%. Looking at the sectors, defense and military industry, environmental protection, and power equipment performed well, with military industry and environmental protection rising by 1.43% and 0.87%, respectively, and power equipment falling by 0.28%; non-ferrous metals, food and beverages, and electronics performed poorly, falling by 7.08%, 6.34%, and 5.29%, respectively. (Western Profit Fund)

Foreign exchange market:Last week, the US dollar index closed down 0.04% on a weekly basis at 104.33 points; the euro/dollar closed down 0.26% at 1.0856 points; the dollar/yen closed down 2.35% at 153.7873 points; the dollar/renminbi closed down 0.29% at 7.2638 points. (BRICS Exchange)