Vol. 25 SSE Newsletter June 2015 Highlights: SSE Composite fell by 7.25% in June 2015, while trading volume showed significant increase compared with that of the previous month The first publicly offered corporate bond after the release of the Management Measures for Issuance and Trading of Corporate Bonds is listed on the SSE The SSE revised the SSE Detailed Rules for Implementation of Margin Trading and Securities Borrowing and Lending and publicly solicited feedback from the market The China Securities Regulatory Commission (CSRC) 2014 Annual Report is officially printed and published The CSRC officially released the Temporary Management Measures for Overseas Traders and Overseas Brokerage Institutions Engaged in Futures Trading of Specific Products in Mainland China
1. Overview of SSE Market For the last 12 months (July 2014 June 2015), the SSE Composite Index reached the highest at 5166.35 (closing price, same below) on June 12 th, 2015 and the lowest at 2038.34 on July 10 th, 2014. In June 2015, the index fell by 7.25%. There have been 245 trading days from July 2014 to June 2015. The daily average turnover value was USD 68.32 billion for the period. The single day turnover value peaked at USD 208.06 billion on June 8 th, 2015 and reached the lowest at USD 12.02 billion on July 21 st, 2014. The daily average turnover was USD 151.45 billion for June, which showed a significant increase compared to that of the previous month. In terms of industry-wide accumulated turnover of June 2015, the top 3 sectors were Manufacturing (USD 1285.1 billion), Finance & Insurance (USD 515.3 billion), and Transportation (USD 225.2 billion).
For the last 12 months (July 2014 June 2015), the monthly average number of new A share accounts was 2,383,800. The single month number of new accounts peaked at 7,198,600 in April 2014, and reached the lowest at 264,900 in July 2014. As of June 2015, the total number of A-share accounts was 120.89 million. In June 2015, the daily average trading volume of ETF was USD 13.38 billion, which represented an increase of 631% compared with USD 1.83 billion in June 2014. The volume reached its highest point at USD 32.21 billion on June 24 th, 2015 and the lowest at USD 6.26 billion on June 3 rd, 2015.
2. SSE Updates On June 4 th, the bond publicly offered by Zhoushan Port Group (ZPG) to qualified investors was listed on the (SSE). It is the first listed publicly offered corporate bond after the release of the Management Measures for Issuance and Trading of Corporate Bonds by the China Securities Regulatory Commission (CSRC), and also the first listed publicly offered corporate bond of a non-listed company. The corporate bond issued by ZPG and underwritten by Zheshang Securities features a size of RMB700 million and a term of 5 years, with both corporate and facility rated at AA+. In May, the subscription ratio of the bond reached 4.84 times and the issuance coupon rate stood at 4.48%, the lowest rate for AA+ bonds in recent bond market, far below the five-year bank loan benchmark interest rate of 5.5%. The issuance result showed that the market institutions highly recognized the corporate bond and also demonstrated the attraction and the advantage of market-based pricing of SSE s bond market. Earlier, the SSE released the Rules for Listing of Corporate Bonds and other supporting rules related to the listing of corporate bonds, further simplified the procedures for bond listing, strengthened the categorized and dynamic management of bonds, and optimized the system of information disclosure, in a bid to boost the development of the corporate bond market. Next, the SSE will continue to improve the supporting systems and market infrastructure for corporate bonds, step up the service for the market, and join hands with all market participants to push forward the development and innovation of the corporate bond market and facilitate the development of the real economy. In June, the SSE revised the SSE Detailed Rules for Implementation of Margin Trading and Securities Borrowing and Lending ( Detailed Rules ), in a bid to enhance risk management on the business of margin trading and securities borrowing and lending (SBL), propel steady growth of the business and protect investors legitimate rights and interests. This was done in coordination with the revision of the Management Measures for Margin Lending and SBL Business of Securities Companies. The key revisions include the following: allow contracts to extend to accommodate the need of investors to hold their position for a long period of time; improve selection standards for funds and bonds as target securities to accommodate the diversified needs of margin trading and SBL; optimize margin trading and SBL systems to improve operation efficiency of the market; reinforce the responsibilities of members in client eligibility management to protect legitimate rights and interests of investors; and enhance risk management systems to ensure stable operation of the business. The revised Detailed Rules will be officially announced and implemented after publicly soliciting feedback from the market.
3. Key Statistics of China CPI has remained stable after decline in the last twelve months. The YoY growth rate of CPI was 2.29% in July 2014, which is the peak during the period. CPI decreased to 0.76% in January 2015, the lowest during the period. From July 2014 to June 2015, M0 generally remains stable and is at USD 0.93 trillion in June 2015. M2 increased steadily, rising from USD 19.0 trillion in July 2014 to USD 21.2 trillion in June 2015. Ratio of raised funds on China s exchange market to amount of new loan was volatile. The average in the past 12 months was 9.9%, with the highest at 19.5% in December 2014 and the lowest at 2.8% in January 2015.
4. Updates on China s Capital Market In June, the China Securities Regulatory Commission (CSRC) officially printed and published the China Securities Regulatory Commission 2014 Annual Report. The Annual Report introduced the major work and achievements of the CSRC in 2014, and focused on the results of reform and development in the capital market in the previous year. Chairman Xiao Gang wrote the introductory remarks for the Annual Report. The Annual Report includes the main text, appendices and tables. The main text comes in six parts: overview of the CSRC, market overview, regulatory transformation, market reform and innovation, investor protection and market accessibility. The appendices and tables include highlights of 2014 in China securities and futures markets regulation, regulatory documents promulgated by the CSRC in 2014, overview of affiliated institutions, key statistics, list of securities and futures firms, list of QFIIs, RQFIIs and overseas institutions with representative offices in China, and list of bilateral MOUs for regulatory cooperation. The Annual Report is a convenient tool for information look-up. On June 26 th, the CSRC officially released the Temporary Management Measures for Overseas Traders and Overseas Brokerage Institutions Engaged in Futures Trading of Specific Products in Mainland China ( Temporary Measures ), to be implemented on August 1 st, 2015. At the same time, according to Article 2, Paragraph 4 of the Temporary Measures, which stipulates that the specific products in Mainland China that these Measures refer to are determined and announced by the CSRC, the CSRC has determined that crude oil futures will be the aforementioned specific product. In December 2014, the CSRC approved Shanghai Futures Exchange to start crude oil futures trading at its International Energy Trading Center. Next, the CSRC will work with relevant institutions and departments on preparatory issues before the crude oil futures are launched, including coordinating with relevant ministries and commissions to release facilitating policies for crude oil futures, reviewing and approving the charter and trading rules of the Shanghai Futures Exchange International Energy Trading Center, providing guidance for business rules preparation, members recruiting, participation by overseas traders and overseas brokerage institutions, market promotion and training, and investor education. The aforementioned work will presumably take three months.
5. QFII, RQFII & QDII As of June 29 th, 2015, the approved quota for QFII, RQFII and QDII were USD 75.54 billion, USD 62.05 billion and USD 89.99 billion respectively. The newly approved quota for QFII and RQFII in June 2015 were USD 1.1 billion and USD 1.3 billion respectively. There was no newly approved quota for QDII. 6.Shanghai-Hong Kong Stock Connect In June 2015, the average daily quota usage percentage for Shanghai Stock Connect was 4.34%. The daily quota usage percentage on June 19 th was 60.03%, which was the peak during the period. The daily quota usage percentage on June 25 th was -27.35%, the lowest during the period. In June 2015, the average daily quota usage percentage for Hong Kong Stock Connect was 5.98%. The daily quota usage percentage on June 1 st was 12.51%, which was the peak during the period. The daily quota usage percentage on June 26 th was -8.19%, the lowest during the period.
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