In the news: RMB gets nod from IMF, CSRC vice-chairman gets investigated, Dali Foods lists in HK and foreign video imports face limits
November 17, 2015 | BY
Katherine Jo &clp articles &This week the IMF supported making the renminbi a reserve currency, the deputy head of the CSRC was suspected of corruption, Dali Foods' IPO raised $1.5 billion and China clamped down on DVD imports
The Chinese currency is set to join the IMF's basket of reserve currencies, with the fund's staff recommending its inclusion. The decision, which has to be approved by the IMF's executive board, will help boost fund inflows into China and likely make President Xi Jinping push ahead with efforts to loosen capital controls. Standard Chartered estimates that the inclusion will help Chinese assets attract over $1 trillion in the next five years. The IMF board will meet on November 30, where political angles will come into play as well. The US has a fairly large share of the votes on the board at 17%, however, it said in late September that it supports the addition of the renminbi, providing the existing criteria are met.
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The vice-chairman of the China Securities Regulatory Commission Yao Gang is being investigated for suspected corruption. The Central Commission for Discipline Inspection gave no further information about the probe. The investigation comes as authorities are scrambling to restore confidence in the stock market after its dramatic rise and fall during the first half of the year, regulatory intervention and reported irregular trading. They have since approached investors, journalists, fund managers and commentators on social media in a crackdown on market manipulation.
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Chinese private snack and beverage company Dali Foods Group was listed on the Hong Kong Stock Exchange for a value of $1.5 billion, the largest offering this year for any private Chinese company and the second-largest IPO in the food sector after WH Group's $2.4 billion listing in 2014. Dalian Wanda holds the record among Chinese private enterprises with its $4 billion share sale in December last year. Dali Foods is partly owned by private equity firm CDH Investments. The two-child policy proposed a few weeks ago will fuel consumer spending overall, and more mouths to feed is good for food and drink companies. It has also led to increases in share prices of infant formula products (Mead Johnson was a big winner, rising 4% after the announcement late October), as well as potential boosts for diaper makers P&G (Pampers) and Kimberly-Clark (Huggies). Competition and marketing activity will surge, testing the new Advertising Law and constant stream of consumer protection regulations.
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China is clamping down on DVD imports that domestic internet companies use to circumvent government controls on showing foreign movies and TV shows online. The new rules will be announced in about a month, according to source. Current regulations place a 30% limit on foreign content online, but sites have reportedly used a back door that gives them the right to stream extra shows from abroad that aren't counted in the quota. The media regulator will cut the number of import licenses for physical media like DVDs and require importers to state whether the content will also be posted online. The rules will impact online video providers like Tencent and Baidu. They have signed deals with HBO and Universal Studios, respectively, to offer foreign content that is increasingly popular in China. Official data shows 461 million people in the country watch videos online – a figure that will only grow. It's challenging for regulators to monitor internet content, so they are placing more restrictions, burdens and liabilities on ISPs – WeChat and Weibo have reported violators' accounts and just last month ISPs were ordered to actively remove illegal material from their cloud networks.
More from CLP:
The Chinese currency is set to join the IMF's basket of reserve currencies, with the fund's staff recommending its inclusion. The decision, which has to be approved by the IMF's executive board, will help boost fund inflows into China and likely make President Xi Jinping push ahead with efforts to loosen capital controls. Standard Chartered estimates that the inclusion will help Chinese assets attract over $1 trillion in the next five years. The IMF board will meet on November 30, where political angles will come into play as well. The US has a fairly large share of the votes on the board at 17%, however, it said in late September that it supports the addition of the renminbi, providing the existing criteria are met.
More from CLP:
The vice-chairman of the China Securities Regulatory Commission Yao Gang is being investigated for suspected corruption. The Central Commission for Discipline Inspection gave no further information about the probe. The investigation comes as authorities are scrambling to restore confidence in the stock market after its dramatic rise and fall during the first half of the year, regulatory intervention and reported irregular trading. They have since approached investors, journalists, fund managers and commentators on social media in a crackdown on market manipulation.
More from CLP:
Chinese private snack and beverage company Dali Foods Group was listed on the Hong Kong Stock Exchange for a value of $1.5 billion, the largest offering this year for any private Chinese company and the second-largest IPO in the food sector after WH Group's $2.4 billion listing in 2014. Dalian Wanda holds the record among Chinese private enterprises with its $4 billion share sale in December last year. Dali Foods is partly owned by private equity firm CDH Investments. The two-child policy proposed a few weeks ago will fuel consumer spending overall, and more mouths to feed is good for food and drink companies. It has also led to increases in share prices of infant formula products (Mead Johnson was a big winner, rising 4% after the announcement late October), as well as potential boosts for diaper makers P&G (Pampers) and
More from CLP:
China is clamping down on DVD imports that domestic internet companies use to circumvent government controls on showing foreign movies and TV shows online. The new rules will be announced in about a month, according to source. Current regulations place a 30% limit on foreign content online, but sites have reportedly used a back door that gives them the right to stream extra shows from abroad that aren't counted in the quota. The media regulator will cut the number of import licenses for physical media like DVDs and require importers to state whether the content will also be posted online. The rules will impact online video providers like Tencent and Baidu. They have signed deals with HBO and Universal Studios, respectively, to offer foreign content that is increasingly popular in China. Official data shows 461 million people in the country watch videos online – a figure that will only grow. It's challenging for regulators to monitor internet content, so they are placing more restrictions, burdens and liabilities on ISPs – WeChat and Weibo have reported violators' accounts and just last month ISPs were ordered to actively remove illegal material from their cloud networks.
More from CLP:
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