Shaanxi Coal thaws China’s fridge IPO market

David Nealis President of Ceres Ltd

Shaanxi Coal plans US$1.62 billion IPO on Shanghai Exchange

China's third largest coal producer; Shaanxi Coal Industry Co., has announced that  it plans to list on the Shanghai Stock Exchange with the aim of raising RMB9.8 billion(US$1.62  billion).

This would be the country’s largest IPO since late 2011 and what many hope is a  sign that the IPO market in China is coming out of its deep freeze.

Shaanxi Coal plans to issue up to 10 billion shares 10% of its expanded capital base after the IPO. The deal is among 11 already approved by the China Securities Regulatory Commission (CSRC).  A spokesman from Shaanxi Coal said the proceeds from the deal will be used to boost its coal reserves, increase production and construct new coal transport facilities.

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China, the world’s 2nd largest economy, continues to be the most important market for companies looking for growth and Chinese companies continue to globalize by investing and selling their products in new markets; what is your company’s strategy for engaging China?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition

Chinese Regulators approve Iron-ore futures

Jane Yang and David Nealis of Ceres in Dalian China

CSRC approves Dalian exchange's iron-ore futures 

The China Securities Regulatory Commission granted Dalian Commodity Exchange approval to debut China's first iron-ore futures. Dalian's product will distinguish itself by being the only physically backed derivatives contract, as opposed to Singapore Exchange's and CME Group's cash-settled products

China, the world’s 2nd largest economy, continues to be the most important market for companies looking for growth and Chinese companies continue to globalize by investing and selling their products in new markets; what is your company’s strategy for engaging China?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition

China Grants Seven QFII Licenses in January 2012

David Nealis President of Blue Bridge at Shanghai Exchange

The China Securities Regulatory Commission (CSRC) granted Qualified Foreign Institutional Investors (QFII) licenses to seven investors including the South Korea's National Pension Service and Shinhan BNP Paribas Asset Management Co Ltd. China launched the QFII scheme in 2003 to allow foreign investors to buy Chinese stocks and bonds and has so far granted 142 QFII licenses and US$22.24 billion in combined investment quotas, which isn’t that large of an amount considering China is the world’s second largest economy.

Is the Flight of Capital from China Aiding in QFII Approval ?

It seems that the flight of capital from China is putting pressure on government officials to grant more QFII (Qualified Foreign Institutional Investor) program approvals. 

The newly appointed Chairman of the China Securities Regulatory Commission (CSRC) Guo Shuqing said earlier this month that they would speed up approvals under the QFII program. The Chinese government has approved almost US$1 Billion in quotas for foreign institutions this year and in the month of December five foreign institutions were granted QFII status which is scene as a very fast approval rate. The QFII program was launched in 2003 to allow qualified foreigners to purchase Chinese stocks and bonds; the total combined quota for investment is only at 21.6 billion. 

Under the QFII program the CSRC grants licenses to qualified foreign intuitions but foreign exchange regulator SAFE grants the quotas.  

Some analyst believe that a fear of a hard landing in China by local officials has recently sped up the QFII approval process to attract capital into the market as well as produced new rules allowing the Hong Kong subsidiaries of mainland brokerages and fund houses to raise offshore RMB to invest the RQFII program (Renminbi Qualified Foreign Institutional Investor). 

The official program that allows outflows of capital from China; the QDII (Qualified Domestic Institutional Investor) has grown at a rapid pace. QDII quotas have reached US$ 74.9 Billion since the third week of December of this year a US$ 820 Million raise over 2010’s US$ 68.4 Billion.

David Nealis at the China Financial Futures Exchange

There are a variety of reasons for this flight of capital from China, for us foreign investors it is having some positive policy reactions by Beijing, but what risks lay a head for us? It seems like 2012 the Year of the Dragon is going to bring us an exciting year in China.