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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  Suning.com Co., Ltd.    002024   CNE000001KF2


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China moves to regulate 'blind' business expansion of financial holding firms

07/26/2019 | 07:14am EST
Headquarters of the PBOC, the central bank, is pictured in Beijing

BEIJING (Reuters) - China's central bank on Friday unveiled the first draft rules to regulate the country's vast and often complex financial holding companies, which it said have had "blind business expansion" in recent years.

The draft rules set minimum asset requirements and ban the holding companies from involvement in non-financial business activities.

"There's a blank in the regulation of the sector, and the risks are accumulating and become exposed," the People's Bank of China said in a statement.

"Financial holding firms, especially those formed by non-financial companies, witness a blind business expansion over the past few years," it added.

The opaque cross-holding structures and "blind" expansion of financial holding companies have alarmed policymakers, who say the control of multiple financial institutions by conglomerates and their ability to do business across different sectors could pose wider, systemic risks.

China has been working towards specific rules regulating financial holding companies since last year.

In a the central bank's 2018 financial stability report released in November, there was a chapter describing the status of Chinese financial conglomerates and naming some, including HNA Group[HNAIRC.UL], Fosun International , China Evergrande Group, Ant Financial Services Group [ANTFIN.UL], Tencent Holdings and JD.com.

According to the draft regulations, financial holding conglomerates with at least 500 billion yuan ($72.69 billion) in assets or have non-bank affiliates that manage 100 billion yuan of financial assets or more will be subject to the rules.

Financial holding firms cannot engage in any non-financial business in order to prevent cross-sector risks, the PBOC said, and it will be illegal for them to inject capital into financial institutions.

To rescue troubled entities affiliated with financial holding firms, the central bank can order the conglomerates to inject capital or transfer their stakes to a third party, the central bank said.

The regulations, which tighten market access for financial conglomerates, are a key measure to contain the country's financial risks "right at the start," according to the PBOC.

Last year, the PBOC put five financial holding companies, including fintech giant Ant Financial, retail conglomerate Suning.com and state-owned China Merchants Group[CNMGP.UL], in a pilot scheme to test their ability to manage risks.

The central bank will seek public comment for the regulations until Aug. 24, and said it would set up a grace period for implementing the rules.

(Reporting by Beijing Monitoring Desk, Cheng Leng and Ryan Woo; Writing by Se Young Lee; Editing by Richard Borsuk)

© Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
ACCESS CO., LTD. 1.88% 811 End-of-day quote.-15.08%
BANK OF CHINA LIMITED 0.31% 3.25 End-of-day quote.-11.92%
CHINA EVERGRANDE GROUP 3.59% 16.14 End-of-day quote.-25.28%
DRAFT INC. -2.62% 2376 End-of-day quote.0.00%
E.ON SE -0.17% 9.14 Delayed Quote.-4.03%
FOSUN INTERNATIONAL LIMITED -0.36% 11.02 End-of-day quote.-2.99%
JD.COM, INC. 1.34% 89.41 Delayed Quote.153.79%
JUST GROUP PLC 0.79% 57.65 Delayed Quote.-27.03%
LETS HOLDINGS GROUP CO., LTD. 1.30% 9.36 End-of-day quote.54.97%
LOOK HOLDINGS INCORPORATED 2.71% 1063 End-of-day quote.-15.10%
NASPERS LIMITED 0.84% 3184.01 End-of-day quote.38.99%
SEEK LIMITED -0.84% 25.96 End-of-day quote.15.12%
SUNING.COM CO., LTD. -0.44% 8.96 End-of-day quote.-11.37%
TENCENT HOLDINGS LIMITED 2.27% 586 End-of-day quote.56.02%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.05% 6.5734 Delayed Quote.-5.64%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.00% 6.5738 Delayed Quote.-5.55%
WILL GROUP, INC. 0.91% 999 End-of-day quote.-20.21%
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Sales 2020 280 B 42 589 M 42 589 M
Net income 2020 1 079 M 164 M 164 M
Net cash 2020 259 M 39,4 M 39,4 M
P/E ratio 2020 73,8x
Yield 2020 0,29%
Capitalization 81 847 M 12 443 M 12 451 M
EV / Sales 2020 0,29x
EV / Sales 2021 0,25x
Nbr of Employees 42 196
Free-Float 29,4%
Duration : Period :
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Mean consensus BUY
Number of Analysts 14
Average target price 11,83 CNY
Last Close Price 8,97 CNY
Spread / Highest target 56,1%
Spread / Average Target 31,9%
Spread / Lowest Target 5,91%
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En Long Hou President
Jin Dong Zhang Chairman
Xiao Ling Wang Chairman-Supervisory Board
Wei Min Sun Vice Chairman
Xiang Sheng Meng Director & Senior Vice President
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