Capital reforms to benefit SME sector

Communist Party plenum is likely to unveil a host of changes to reflect the importance of smaller firms in helping to boost employmentA slew of capital market reforms are expected to be unveiled next month while Communist Party cadres meet at a plenum to decide the frameworks by which to facilitate the country's economic rebalancing.self storageWhile small and medium-sized enterprises have long been discriminated against in financing, their increasing importance to employment creation and the growth of the economy is expected to push policymakers to redesign capital market arrangements to address their capital thirst.The mainland will soon endorse the expansion of its Nasdaq-style Securities Trading Automated Quotations network at Beijing's Z-Park, also known as China's Silicon Valley, into a national-level exchange to facilitate listings of start-ups, the China Securities Journal reported yesterday, citing unnamed sources.In a bid to ensure SMEs easier access to funding, the securities regulator was expected to further support brokerages to develop asset management, direct investment and asset securitisation businesses, the newspaper said.More futures products will be introduced to help companies manage risks, after egg, steam, coal and bond futures were launched this year.In addition, the pilot scheme for SMEs to sell privately placed bonds would be expanded to more provinces and rules would be announced governing mergers and acquisitions of non-listed companies, the paper said.It is widely expected the party will also decide, during the third plenary session of the 18th party congress, to develop small and private banks to better service SMEs, accelerate the development of the bond and securitisation markets and gradually liberalise deposit rates."The progress with the financial sector reforms should help companies find new channels of financing and cheaper f迷利倉nding," said Wang Tao, an economist at UBS Securities. "This means that the economy may find new ways to increase overall leverage further, while it would provide additional support for investment and growth in the next couple of years."The mainland's leverage has been soaring at a worrying speed since a lending binge in the wake of the 2008-09 global financial crisis, and bad loans have been building up as funding flows to inefficient government-led construction projects.The banking regulator is soliciting public opinion to more than triple the minimum registered capital requirement for new wholly owned foreign banks and joint-venture banks, according to a draft released by the China Banking Regulatory Commission at the end of last month.In a bid to boost risk management, the drafted rule on administrative permits for foreign banks raises the minimum capital requirement for new ventures to 1 billion yuan (HK$1.26 billion) from 300 million yuan.The CBRC also intends to expand the scope of permitted activities for foreign banks to include yuan-denominated loans, wealth management through overseas investment products and credit card business, according to the draft.The mainland's four major banks issued 276 billion yuan in new loans last month, state-owned Shanghai Securities News said yesterday, citing an industry source, adding that total loans for the month could reach 840 billion yuan, Reuters reported.Total loans issued last month by the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank will be the third-highest monthly total so far this year. The four banks lent 370 billion yuan in January and 330 billion yuan in March, the paper said.Mainland banks gave 704 billion yuan of new loans in August, beating expectations of 600 billion yuan and suggesting an economic boost from the new credit.自存倉