1/ 11 A thread on a piloting program #China Wealth Management Connect(跨境理财通). Central to understand: Blackrock $1b onshore fund subscription as first WhollyOwnedForeign Enterprise (WFOE), Qianhai/Hengqin Plans to spur integration HK-GuangDong-Macau Bay area.
2/11 Analogy: Think Stock/bond Connect trading program but for asset management industry. Secondary effect also plays to the ambition of RMB internationalization. Again, Dollar’s reserve currency status could only be lost by future US obsession with #MMT.
3/11 Those who recently started paying attention to China’s regulatory/policy framework, this is very typical how policies got implemented: start small to tread water and if it went out of control, shut it down completely, then start testing again.
4/11 Essentially residents in 9 cities who qualify from GuangDong province could start buying low/medium non-complex wealth management products approved by regulators in HK/Macau. HK/Macau residents can start buying mainland onshore financial products.
5/11 Qualifications for mainland investors, think #FINRA accredited investors idea: 5 years of tax records. Either 2 yrs invt experience + family investment assets >=Yuan1mil, or family investment assets>=Yuan 2mil ($310k). Can not group money together from people to qualify.
6/11 No qualification requirements for HK/Macau investors who buy onshore financial products. The aggregate quota for the scheme is 150 billion yuan with an individual investor MAX quota of 1 million yuan for investment.
7/11 HSBC, BOC-HK, Hang Seng, Citibank HK all have plans to offer 100+ products covering in funds, bonds, deposits and foreign exchange services. Standard Chartered plans center in Guangzhou with more than 1600 staff.
8/11 It took two years from planning to piloting. Four official notices were given from the beginning in 2019 to current date. So it is not necessarily completely out of blue.
9/11 This program will be running parallel to the WOFE asset management licenses given to foreign asset management firms. All these point to continued effort of financial integration with HK, Macau and offering tests on how to gingerly allow mainland investors to invest overseas.
10/11 There has been significant assets moving from HK to Singapore last 2 years. Shanghai and Singapore both vie to be THE financial center in Fast East. However, this pilot suggests HK still retains the eminent role with its common law legal system and proximity to mainland.
11/11 The Chinese and English news links below for your reference. finance.sina.com.cn/stock/roll/202… (in Chinese)

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More from @liqian_ren

15 Sep
1/5 #China YOY Aug #retail #sales actual 2.5% vs expected7.4%. Said repeatedly here/clients that growth is the No. 1 risk but everyone loves to talk Regulation/ WAR. Going forward, count on continued monetary support #PBOC, #growth could even surprise on the positive side soon.
2/5 About Delisting risk, did you know that among large/mid BROAD #China universe, only about 6%, or 28 companies that are only listed in the US, after a barrage of companies like @NetEase_Global dual listed in HK? Below is the details. The key is Broad Universe, of course. Image
3/5 Hard to write something that has shelf life. The focus of future is really HK EX and Shanghai STAR board. 1 yr later, likely 5-7 comp. would sole US listed among large/mid cap. Chinese companies know both US and China didn't want them to list in US. wisdomtree.com/blog/2020-12-1…
Read 6 tweets
12 Sep
1/3 A quick thread of #Vietnam. 2020, discussions rage on supply chain diversification from China. Western companies prefer LatinAm, India and South East Asian Nations(ASEAN) Asked local Chinese businesses, they prefer Cheaper Chinese cities, ASEAN, India. Intersection: ASEAN
2/3 Among ASEAN countries, Vietnam came up constantly, for its similar political and cultural background with China. From @IMFNews Vietnam fastest growing among ASEAN neighbors last 10 years and project to grow fastest next 5 years.
3/3 Vietnam is largest weight 29% in @msci frontier index. Its communist party is watched closely in China as it seemed have moved faster toward liberalization.
Read 4 tweets
11 Sep
For #China Equity VIE risk assessment, I highly recommend paying attention to this company 旷视科技 (en.megvii.com)It may become a VIE structured company but listed in Shanghai STAR board. That would be a huge regulatory stamp of approval. baijiahao.baidu.com/s?id=171042585…
@Reuters is reporting that Chinese companies with #VIE structure needs government approval before listing in HK. That should be abundantly clear after #DIDI debacle. My own assessment from a while back still stands well. wisdomtree.com/blog/2021-08-1…
#MEGVII (旷视科技)'s VIE risk disclosure (Chinese, p11) pdf.dfcfw.com/pdf/H2_AN20210… for Shanghai STAR board is extensive and legal wording similar to #BABA SEC 20F disclosure (English) alibabagroup.com/cn/ir/secfilin…
Tencent HKex disclosure (English) on WFOE shortest static.www.tencent.com/uploads/2021/0…
Read 4 tweets
6 Sep
1/21 A long thread of local context for Ant Financials’ Credit Scoring Joint Venture and Chinese state ownership. There has been significant recent news of Chinese SOEs taking stakes in private companies. #PBOC #BABA #China #Ant #Didi #ByteDance #Hefei #ZheJiang #Evergrand
2/21 How to make sense of this trend? ONE: the government’s goal is to take enough equity to acquire a seat in the board, bail out a locally troubled company, or pure investment return, not necessarily ownership and control per se.
3/21 Taking state ownership means government needs to pony up significant capital. In BOE Tech deal, Hefei city put in more than $2 billion. It had four more investment deals with >$1 billion. Many numerous deals like PuDao Credit, the Beijing-affiliated SOE put up $52.5million.
Read 22 tweets
31 Aug
1/18 Some local perspective on gaming regulations and "profound revolution": Tencent’s revenue growth in online games has been decreasing since 2018. Under 18 accounts for 6% of revenue. Policy restrictions on online video gamers on company fundamental is negligible.
2/18 Chinese have an hour less leisure time than Americans, but gaming penetration among adults is very high, though I’m skeptical it’s 90%. The likely economic reason: Gaming, particularly online video gaming, is the CHEAP leisure option. Lux Switch/PS4 sales are rising.
3/18 Don’t be led by headlines. For the first time, E-sports will be added as official sports in the 2022 Asian Games, hosted in HangZhou, China. The host country adds sports that it’s good at to add to medal counts. sport.gov.cn/n316/n338/c973…
Read 18 tweets
27 Aug
1/N A thread on China's demography crisis.
2/N 1-6-18-27 My paternal grandfather has 6 children, 18 grand kids, and 27 great grand kids. My generation was the hardest hit with the one child policy. This is the pattern for my maternal grandfather(1-4-7-11). It generally mirrors the birth per women trend charts. Image
3/N But does US/China has demography crisis? In 20 years, maybe, US/China old age dependency ratio will reach CURRENT level in Japan. I say MAYBE because that forecasting model is highly uncertain. Even a little bit change of fertility rate could substantially change outcome. Image
Read 8 tweets

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