Hong Kong’s HK 50 index rose and the Chinese yuan edged up as traders assess the outcome of the first virtual meeting between US President Joe Biden and Chinese leader Xi Jinping.
China intends to roll back curbs on private share placements
China is on the verge of rolling back curbs on private share placements by businesses with the aim of improving their access to funding within the initiative to reduce strains on the country’s businesses and the domestic economy.
In fact, the curbs were put in place by watchdogs two years ago in the face of worries about abuse by businesses and traders as well as a lack of transparency on such share sales that were below the stock's last openly traded value.
Additionally, the China Securities and Regulatory Commission is working on amendments to the regulations, including limits on the sale of stocks purchased via private placements as well as the mechanism for pricing stocks in private offerings.
In China, private placements rallied five-fold to $172 billion, dodging watchdogs’ controls on initial public offerings and also boosting worries that businesses were raising too much funds for speculative or inefficient purposes.
It backed fresh rules from the CSRC in 2017 restricting the size of such fundraisings to just 20% of a firm’s capitalization, which requires an 18-month gap in between private offerings, and without some sectors altogether.
Nevertheless, the clampdown on private placements meant a great number of businesses had to turn to ramping up debt instead, contributing to the sizeable corporate debt burden in the world’s number two economy.
A long-lasting regulatory clampdown on riskier types of financing as well as debt restricted many businesses’ access to financing in 2018, resulting in the biggest-ever year for onshore defaults and also a steep tail-off in investment, which put pressure on the economy.
More businesses than ever are missing payments in 2019, highlighting an ongoing cash crunch as the Chinese cabinet intends to give up broad policy easing.
A selloff in stocks stopped. S&P 500 has reversed up from the 100-day moving average. It should be the perfect time to buy the index.
The US showed strong retail sales for August despite the spread of the Delta virus strain. As a result, the US dollar rocketed and gold dropped by 2286 points in half an hour after the release.
As Europe moves into recession, next week may provide us with some amazing trading opportunities. Here they are!
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.