Jul 3

China Business News: Fund Companies Focus on Launch Funds

Editorial Staff
May 27, 2022

Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.

China business
Image: Phuong Uyen Vo Hoang via Unsplash.

This week’s highlights:

  • China encounters a surge of launch funds: Due to the recent market disruptions, Chinese fund companies are feeling uneasy about establishing new funds and are focusing on launch funds. Wind, a leading provider of financial information services in China, published data which shows that a total of 112 launch funds were established up to May 26. However, regarding the scale of the launch funds, the situation is far from perfect. According to the statistics, only 23 bond funds have an initial offering size of more than 1 billion RMB (around $150 million) and the rest are all below 50 million RMB (around $7.5 million). According to regulations, if the fund asset size is less than 200 million RMB, the fund contract will be automatically terminated. Some insiders point out that the liquidation risk is a major consequence to be considered while making investments in Chinese public launch funds. (The Economic Observer)
  • Military communication equipment supplier Bit Technology on Shanghai Stock Exchange Science and Technology Innovation Board: Bit Technology, one of the important suppliers of information technology equipment for the People’s liberation army had its application for an IPO on the Shanghai Stock Exchange Science and Technology Innovation Board accepted on May 23. The company intends to raise 1.505 billion RMB (around $225 million) for military information technology equipment upgrades and industrial projects, an R&D technology center construction project, and a number of working capital projects. Bit Technology’s business focuses on research and development, production and sale of military communication equipment. The products are mainly divided into network communication, audio and video command and dispatch, as well as communication equipment spare parts. The company has been in close cooperation with major Chinese military groups and enterprises, such as China Electronics, China Aerospace Science and Technology Group, China Aerospace Science and Industry Group, among others. (Chinese Economy Net)
  • Digital strategy for promoting cultural enterprises to get listed on the market: Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued  “Opinions on promoting a digital strategy for cultural enterprises”, proposing to support digital cultural enterprises that meet Shanghai Stock Exchange Science and Technology Innovation Board listing requirements. Experts suggest that the listing and financing criteria for digital cultural enterprises can subsequently be relaxed in order to boost investment and financial market development. In terms of financial support, the “Opinions” also proposed that financial institutions be encouraged to develop credit products, which are adapted to the characteristics and needs of cultural digital enterprises. (Sina Finance)
  • Guosen helps to issue epidemic prevention and control bonds: Recently, Guosen Securities Company, a Chinese state-owned financial services company helped CCCC Shanghai Dredging Company to successfully issue 2022 short-term corporate private placement bonds (Phase I) (Epidemic Prevention and Control Bonds) for professional investors on the Shanghai Stock Exchange (SSE). The bonds are the first and only of their kind to be issued by a central enterprise this year, with an issue size of 200 million RMB (around $30 million) and a maturity of 180 days. Its final issue interest rate is 2.10%, the lowest for the issuance of central corporate bonds of the same maturity. During the issuance procedures, the SSE opened a green channel for the project. It was also widely recognized by the market and investors, and the issuance cost resulted to be very low, reflecting the desire of all parties to unite and fight the epidemic together. (First Financial)
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