China In-Focus — Asian giant halts over 20 IPOs; unemployment insurance payouts hit record high

RIYADH: Chinese bourses have halted processing more than 20 initial public offering plans sponsored by China Merchants Securities, following an investigation into the broker, according to exchange disclosures.

The Shenzhen Stock Exchange has suspended 15 IPO plans set for its ChiNext board, while the Shanghai exchange has paused five IPOs targeting its tech-focused STAR Market since last Friday, exchange filings showed.

Three other IPOs targeting the Beijing Stock Exchange were also affected.

The bourses attributed the halts to an investigation by the China Securities Regulatory Commission into China Merchants Securities, their common sponsor.

The CSRC decided to file a case against China Merchants, as it failed to perform due diligence and was suspected of rule violations during a case in 2014, the broker said earlier this month.

The brokerage said it would cooperate fully with the CSRC.

China has vowed “zero tolerance” toward securities and accounting fraud, seeking to stabilize and reform its capital markets and channeling more money to fund innovation and economic growth.

Unemployment insurance payouts 

China’s unemployment insurance payouts hit a record high in June, adding to signs of a struggling labor market as the economy has been badly hit by COVID-19 outbreaks and a property crisis.

Payments by China’s unemployment insurance fund jumped 256.6 percent in June from a year earlier to 37.19 billion yuan ($5.42 billion), according to Reuters’ calculations based on data from the Ministry of Human Resources and Social Security. That was the highest since the data series began in January 2013.

The surge in the payouts resulted in a deficit of 22.74 billion yuan in the fund in June, widening from a 4.91 billion yuan deficit in May and contrasting with monthly surpluses from January to April.

China’s unemployment insurance fund is pooled from employers, employees and government subsidies, and the spending offers help with the basic needs of the jobless.

Green bond rules tightened 

China has raised the bar for issuances in the world’s second-biggest green bond market, taking a major step toward adopting global standards and eliminating ‘greenwashing’.

Starting this month, the Shanghai Stock Exchange, China’s premier bourse, requires 100 percent of the proceeds from green bond issuances to be invested in green projects such as clean energy — compared with at least 70 percent previously — according to a notice seen by Reuters.

Separately, the CSRC has instructed both the Shanghai and Shenzhen bourses to revise rules to bring issuances of such bonds in line with the newly published China Green Bond Principles, said two sources.

New vice governor of central bank

China is set to name Zhang Qingsong as a vice governor of the central bank, financial magazine Caixin said on Wednesday.

Zhang, president of the Agricultural Bank of China, one of the “big four” state banks, is likely to fill a vacancy left after Liu Guiping was appointed vice mayor of Tianjin in April, Caixin said, citing sources.

The People’s Bank of China now has four vice governors — Chen Yulu, Pan Gongsheng, Fan Yifei and Liu Guoqiang. Yi Gang has been central bank governor since 2018.

Zhang, 57, is a seasoned banker who worked as vice president of Bank of China and president of policy bank the Export-Important Bank of China, an official biography showed.

During his stint at the Bank of China, Zhang held senior posts in Hong Kong, Singapore and Luxembourg.

(With input from Reuters)