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China this week – July 2015

A roundup of China news relevant to the asset management industry for the week of July 13.

China’s wealthy population to exceed average growth

By the end of 2015, China is forecast to have 1.12 million individuals with investable assets worth over 10 million yuan ($1.6m), writes the Shanghai Daily, citing a report from Forbes and AIA.

The increase of about 200,000, which is double the average annual increase, is driven by entrepreneurship and wealth-management income.

“The assets of the wealthy individuals were the result of a stronger performance of the domestic bond, stock and fund markets. Their financial assets, excluding cash and deposits, jumped 32% in 2014 [compared to 2013].”

The total assets of the group are set to reach 114.5trn yuan by year-end, an increase of 8trn yuan from the end of 2014.

The rich chose cash, deposit and wealth management products as favorite investment options, followed by stocks and real estate.

CSRC defines ‘vicious shorting’ 

“Vicious short-selling” is defined as “inter-market and inter-temporal market manipulation using stock index futures,” according to a spokesman for the China Securities Regulatory Commission (CSRC), reported Xinhua on July 11.

The CSRC and the Ministry of Public Security are conducting a joint investigation on vicious short sellers, whom they believe were a key reason for the recent mainland stock market crash.

China is also probing virtual stock trading accounts, according to a July 13 report in China Daily.

The CSRC in a statement ordered brokerages to register new trading accounts for retail investors in the legal name of the client. The regulator said it will probe into existing virtual accounts in the wake of the latest stock crash.

Meanwhile, an article in Caixin argued that the A-share market is not impacting on China’s financial stability because it has not caused big trouble for major financial institutions, yet “regulators cannot resist calls to nose in” the market.

China widens access to bond markets for foreign investors

China’s central bank will lift the quota limit and approval procedure for foreign central banks, sovereign funds and international financial institutions investing in the inter-bank bond market, Caixin reported on July 15. The move is meant to increase the significance of the RMB as a foreign reserve currency and support the government’s efforts to get the RMB included in the IMF’s Special Drawing Rights.

Earlier in the week, the CSRC also made a pledge for greater transparency on domestic corporate bond issuances. A CSRC spokesman said that the regulator’s feedback on applications for corporate bond issuances will be made public in order to make the approval procedure more transparent, the Security Times wrote on July 11. Companies need the permission of the CSRC before selling bonds.

China wealth manager in $53m NYSE IPO

Jupai Holdings, a wealth manager with an asset management arm based in Shanghai, raised $53m in an IPO on the NYSE Thursday, according to Bloomberg. Jupai is only the second wealth manager from China to list overseas. Noah Holdings went public in the US in 2011.

Part of the Mark Allen Group.