Financial Services in China

1
Financial Services in China

• WTO implementation Joining WTO in 2001, by 2007
  a level-playing field
• Financial sector reform
• Bank restructuring. Loan classification and
  credit risk. Provisions for bad debt. Corporate
  governance.
• State owned enterprises reform
• Social security system development
• Banking (not allowed to become a majority owner
  of firms)
• The PBOC (Peoples Bank of China) established high
  capital requirements for foreign banks.
• Receive local currency after 2007
• HSBC and Standard Chartered. Citibank, Bank of
  East Asia, etc.
• Insurance Regulated by China Insurance
  Regulatory Commission (CIRC)
• Over 30 foreign insurance companies. Life
  insurance. Property insurance.
• Fund Management and Securities (China Securities
  and Regulatory Commission CSRC).
• Limit foreign investors to a max of 33 share
  holdings in 2002.

2
Stocks in China

• A shares for Chinese public
• B shares for foreigners
• C shares for legal-person
• H shares for Hong-Kong listed securities for
  foreigners and do not trade inside China.
• ADRs or GDRs (in London). Not very clear what
  these shares represent. Difficult for raising
  capital.
• State owned enterprises (SOEs) have been favored
  for raising foreign capital.
• The Central government does not sell its shares
  to the public.
• Severe restrictions on institutional trading. Too
  many restrictions.
• Management does not care about the share prices.
  They may want to push prices down to force
  privatization

3
March 2003 Quotations

• China SE Shanghai A 1,580.53
• China SE Shanghai B 125.69
• China SE Shenzhen A 454.85
• China SE Shenzhen B 206.73
• Chian SE Shang Composite 1,511.93
• China SE Shenz Composite 431.29
• China SE Shang 180 A Shr 2,799.88
• China SE Shenzhen 100 1,111.99
• Matthews China Fund