Latest news with #ShanghaiStockExchange
New Straits Times
6 days ago
- Business
- New Straits Times
Shanghai bourse gives bond investors a taste of high yields with new framework, sources say
SHANGHAI: The Shanghai Stock Exchange plans to facilitate more companies to issue bonds and attract investors with a new framework for such issuances, two sources said, as China looks to boost funding options for the private sector to revive its economy. Fifty-three bonds worth 37 billion yuan (US$5.20 billion) have been sold so far under the new mechanism, which was quietly launched as a pilot late last year, said the sources with direct knowledge of the exchange's scheme. The deals were made possible after companies under the new framework, which excludes developers and financial firms, were required to make more timely disclosures about their businesses and bolster measures to protect investors, they added. The aim is to double the issuance number this year, said the sources. Underwriters for these deals have been asked to play a more proactive role in creating demand by facilitating trading of the bonds in the secondary market, said the sources, who declined to be named as they were not authorised to speak to the media. These measures highlight Beijing's efforts to address a mismatch in China's 33 trillion yuan corporate bond market, where state enterprises dominate. Currently, private issuers account for just 2.4 per cent of China's credit bond market, compared with 95 per cent for state-owned companies, according to Shenwan Hongyuan Securities. Beijing has vowed to broaden the financing pipeline for the private sector, which contributes more than 60 per cent of economic output and over half of tax revenue, especially as it looks to cushion the impact of Sino-US tensions on the domestic economy. Investors typically do not consider onshore bonds of private firms as an investment option, as they seek safety in notes issued by state-owned enterprises (SOEs) and financial firms, said one of the sources. At the same time, "investors complain of meagre yields" offered by state-backed issuers in a low-interest-rate environment, making the Shanghai exchange's new framework a timely move, said the source. The 53 companies, including privately owned conglomerate Nanshan Group and electrical equipment maker TBEA Co offered coupon rates averaging just shy of 3 per cent, and as much as 4 per cent, for their bonds under the new framework, said the sources. That compares with financing costs of around 2 per cent for big, state-owned issuers. Details of the new framework have not previously been reported. The Shanghai Stock Exchange did not respond to Reuters' request for comment. Default risks The Shanghai bourse arranges frequent virtual and physical roadshows for securities firms, hedge fund houses and wealth managers to better understand the businesses and financial health of the issuers under the initiative, the sources said. The bourse also pushes brokerages to buy the bonds they underwrite and trade the securities in the secondary market to create demand and whet investor appetite for these issuances, they added. Despite the allure of higher returns, some investors remain cautious given the uncertain outlook for private businesses amid sluggish consumer demand in the world's second-largest economy. Huang Xuefeng, credit research director at Shanghai Anfang Private Fund Co, said his company had bid for some bonds under the new framework, but most of the issuers were not very appealing. "The coupon rates are not super attractive, especially when the issuer is a private company," Huang said. "One would prefer bonds sold by local government financial vehicles, which have few default risks." Huang said coupon rates higher than five per cent by private firms would be enticing, but such pricing could betray financial weakness, potentially discouraging investment by risk-averse institutions. Private companies accounted for 64 per cent of China's bond defaults by value between 2014 and August 2023, according to Shenwan Hongyuan. Investors in China typically do not flock to low-rated, high-yield bonds, unlike in the US, where the junk bond market is a key segment and has played a pivotal role in financing tech innovations and leveraged buyouts.
Yahoo
6 days ago
- Business
- Yahoo
Exclusive-Shanghai bourse gives bond investors a taste of high yields with new framework, sources say
(Reuters) -The Shanghai Stock Exchange plans to facilitate more companies to issue bonds and attract investors with a new framework for such issuances, two sources said, as China looks to boost funding options for the private sector to revive its economy. Fifty-three bonds worth 37 billion yuan ($5.2 billion) have been sold so far under the new mechanism, which was launched quietly as a pilot late last year, said the sources with direct knowledge of the exchange's scheme. The deals were made possible after the companies under the new framework, which excludes developers and financial firms, were required to make more timely disclosures about businesses, and to bolster measures to protect investors, they added. The aim is to double the issuance number this year, said the sources. Underwriters for these deals have been asked to play a more proactive role in creating demand by facilitating trading of the bonds in the secondary market, said the sources, who declined to be named as they were not authorised to speak to the media. These measures highlight Beijing's efforts to address a mismatch in China's 33 trillion yuan corporate bond market with state enterprises dominating the market. Currently, private issuers account for just 2.4% of China's credit bond market, compared with 95% for state-owned companies, according to Shenwan Hongyuan Securities. Beijing has vowed to broaden the financing pipeline for the private sector, which contributes more than 60% of the economic output and over half of tax revenue, especially as it looks to cushion the impact of Sino-U.S. tensions on the domestic economy. Investors typically do not consider onshore bonds of private firms as an investment option, as they seek safety in notes issued by state-owned enterprises (SOEs) and financial firms, said one of the sources. At the same time, "investors complain of meager yields" offered by state-backed issuers in a low-interest-rate environment, making the Shanghai exchange's new framework a timely move, said the source. The 53 companies, including privately owned conglomerate Nanshan Group and electrical equipment maker TBEA Co, offered coupon rates averaging just shy of 3% - and as much as 4% - for their bonds under the new framework, said the sources. That compares with financing costs of around 2% for big, state-owned issuers. Details of the new framework have not previously been reported. The Shanghai Stock Exchange did not respond to Reuters' request for comment. DEFAULT RISKS The Shanghai bourse arranges frequent virtual and physical roadshows for securities firms, hedge fund houses and wealth managers to better understand the businesses and financial health of the issuers under the initiative, the sources said. The bourse also pushes brokerages to buy the bonds they underwrite and trade the securities in the secondary market to create demand and whet investor appetite for these issuances, they added. Despite the allure of higher returns, some of the investors are not very sanguine about the investment option given the uncertain outlook for private business amid sluggish consumer demand in the world's second-largest economy. Huang Xuefeng, credit research director at Shanghai Anfang Private Fund Co, said his company had bid for some bonds under the new framework, but most of the issuers were not very appealing. "The coupon rates are not super attractive, especially when the issuer is a private company," Huang said. "One would prefer bonds sold by local government financial vehicles, which have few default risks." Huang said that coupon rates higher than 5% by private firms would be enticing, but such pricing could betray financial weakness, potentially discouraging investment by risk-averse institutions. Private companies accounted for 64% of China's bond defaults by value between 2014 and August 2023, according to Shenwan Hongyuan. Investors in China typically do not flock to low-rated, high-yield bonds, compared to the U.S. where the junk bond market is a key segment and has played a pivotal role in financing tech innovations and leveraged buyouts.
Zawya
6 days ago
- Business
- Zawya
Shanghai bourse gives bond investors a taste of high yields with new framework, sources say
The Shanghai Stock Exchange plans to facilitate more companies to issue bonds and attract investors with a new framework for such issuances, two sources said, as China looks to boost funding options for the private sector to revive its economy. Fifty-three bonds worth 37 billion yuan ($5.2 billion) have been sold so far under the new mechanism, which was launched quietly as a pilot late last year, said the sources with direct knowledge of the exchange's scheme. The deals were made possible after the companies under the new framework, which excludes developers and financial firms, were required to make more timely disclosures about businesses, and to bolster measures to protect investors, they added. The aim is to double the issuance number this year, said the sources. Underwriters for these deals have been asked to play a more proactive role in creating demand by facilitating trading of the bonds in the secondary market, said the sources, who declined to be named as they were not authorised to speak to the media. These measures highlight Beijing's efforts to address a mismatch in China's 33 trillion yuan corporate bond market with state enterprises dominating the market. Currently, private issuers account for just 2.4% of China's credit bond market, compared with 95% for state-owned companies, according to Shenwan Hongyuan Securities. Beijing has vowed to broaden the financing pipeline for the private sector, which contributes more than 60% of the economic output and over half of tax revenue, especially as it looks to cushion the impact of Sino-U.S. tensions on the domestic economy. Investors typically do not consider onshore bonds of private firms as an investment option, as they seek safety in notes issued by state-owned enterprises (SOEs) and financial firms, said one of the sources. At the same time, "investors complain of meager yields" offered by state-backed issuers in a low-interest-rate environment, making the Shanghai exchange's new framework a timely move, said the source. The 53 companies, including privately owned conglomerate Nanshan Group and electrical equipment maker TBEA Co, offered coupon rates averaging just shy of 3% - and as much as 4% - for their bonds under the new framework, said the sources. That compares with financing costs of around 2% for big, state-owned issuers. Details of the new framework have not previously been reported. The Shanghai Stock Exchange did not respond to Reuters' request for comment. DEFAULT RISKS The Shanghai bourse arranges frequent virtual and physical roadshows for securities firms, hedge fund houses and wealth managers to better understand the businesses and financial health of the issuers under the initiative, the sources said. The bourse also pushes brokerages to buy the bonds they underwrite and trade the securities in the secondary market to create demand and whet investor appetite for these issuances, they added. Despite the allure of higher returns, some of the investors are not very sanguine about the investment option given the uncertain outlook for private business amid sluggish consumer demand in the world's second-largest economy. Huang Xuefeng, credit research director at Shanghai Anfang Private Fund Co, said his company had bid for some bonds under the new framework, but most of the issuers were not very appealing. "The coupon rates are not super attractive, especially when the issuer is a private company," Huang said. "One would prefer bonds sold by local government financial vehicles, which have few default risks." Huang said that coupon rates higher than 5% by private firms would be enticing, but such pricing could betray financial weakness, potentially discouraging investment by risk-averse institutions. Private companies accounted for 64% of China's bond defaults by value between 2014 and August 2023, according to Shenwan Hongyuan. Investors in China typically do not flock to low-rated, high-yield bonds, compared to the U.S. where the junk bond market is a key segment and has played a pivotal role in financing tech innovations and leveraged buyouts. (Reporting by Shanghai Newsroom; Editing by Sumeet Chatterjee and Stephen Coates)
Bloomberg
18-07-2025
- Business
- Bloomberg
China Snack Maker Seeks Government Support After 45% Price Cut
A Chinese snacks maker that cut prices by 45% now plans to make the local government its largest shareholder, in a sign of how bruising deflation in the world's second-biggest economy is claiming corporate casualties and requiring growing state intervention. Ningbo Hanyi Venture Capital Partnership Enterprise LP, which currently holds more than 35% of Wuhan-based Bestore Co., along with with another investor plans to sell a combined 21% to an entity owned by the local government. The transaction will be valued at about 1.05 billion yuan ($146 million), according to a statement to the Shanghai stock exchange.
Nikkei Asia
14-07-2025
- Business
- Nikkei Asia
China stocks climb on higher dividends, led by bank shares
Major Chinese banks are posting dividend yields of 4% to 5%, far above the average for CSI 300 companies as a whole. (Photo by Akira Kodaka) TOSHIHIRO SATO SHANGHAI -- Chinese stocks hit the highest level in three and a half years on Monday, lifted by anticipation of increased dividends and speculation about new measures to end a real estate downturn. The Shanghai Stock Exchange Composite Index rose for a third consecutive trading day to close at 3,519.65.
