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1.7 Small and Medium-Sized Banks were Subjected to Penalties for Covering up NPL
Credit risk in the banking and insurance industry has increased due to the pandemic of Covid and other factors. In the past year, the overall non-performing loan (NPL) balance and NPL ratio reported by institutions have increased. Small and medium-sized banks are under more significant pressure on asset quality, due to small size and weak risk resistance. As of February 5, 7 small and medium-sized banks have been punished for covering up NPL. In addition, 2 banks in Shandong recently had their rating reports postponed due to the delay in the publication of their annual report. In the past year, there were several other banks with similar situations.
2.Structured Deposits are Recorded as Financial Assets Held for Trading
Recently, the Ministry of Finance and China Banking and Insurance Regulatory Commission(CBRC) jointly issued a notice requiring enterprises to prepare annual reports in strict compliance with the relevant provisions.
It is clearly stated that structured deposits held by enterprises should be classified in accordance with the provision of Accounting Standard for Enterprises No.22 on the characteristics of contractual cash flows of financial assets and the business model for managing financial assets, and should be recognized, measured and presented accordingly.
For structured deposits absorbed by commercial banks should be classified as financial assets at fair value through profit or loss and recorded in the account of “financial assets held for trading” and presented in the balance sheet under the item of “financial assets held for trading”.
3.Local Governments Accelerate to Issue Refinancing Bonds which have Reached $64.64 Billion this Year
(Securities Daily) According to the data from Eastmoney Choice, as of February 7, the scale of local bonds issued since this year reached 418.06 billion yuan ($64.64 billion), and all of them were refinancing bonds. Cui Zhijun, professor of Beijing National Accounting Institute, said that all the local bonds issued since this year are refinancing bonds, and the local governments pay off their maturing debts by borrowing new ones. There are two main reasons for this: First, the stock of replacement debt has recently been at the peak of debt repayment; Second, because of the impact of tax cuts and pandemic, the financial growth of local governments has been affected.
4.Urea Prices Increased Nearly 30% YoY
The data shows that as of February 5, the spot price of urea was RMB 2,126.67 ($313.4) per ton, and it increased nearly 30% year-on-year(YoY) compared to last year’s RMB 1,650 ($255.15) per ton. The rise of urea prices was largely influenced by the previous shutdown of natural gas-based nitrogen fertilizer factories. Since mid-December last year, in order to ensure the supply of natural gas for civilian use, the natural gas-based nitrogen fertilizer factories had been shut down, which had lasted for more than a month. According to a survey from the China Nitrogen Fertilizer Industry Association on January 20, the daily production of domestic urea enterprises using natural gas as raw material was 11,000 tons, down 49.8% YoY. This has caused a tight supply of nitrogen fertilizer and a rapid increase in market prices.
5.Panel Prices Continue to Rise in Early February, Supply Shortages will Continue
Panel prices in the first half of February continue to rise. The price of the 55-inch TV panel rose by $4, an increase of 2%. The average increase of 27-inch monitor panel and 14-inch laptop panel is 0.8% and 1.8%, respectively. In the case of upstream glass and other materials that are in short supply, and the shortage of Driver IC, the actual supply of panel factories will continue to be tight. The downstream stocking will also be more active, and the industry supply shortage will continue. Regarding companies, BOE Technology and TCL Technology are the leading large-size panel factories.
6.Hedge Funds Bet on Oil’s ‘Big Comeback’ after Pandemic Hobbles Producers
(Reuters) – Hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production. Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said. Global oil benchmark Brent has jumped 59% since early November when news of successful vaccines emerged. Last week it hit pre-pandemic levels close to $60 a barrel. U.S. crude has climbed 54% to around $57 per barrel during the same period.
7.Exports from UK to EU Down 68% since Brexit Trade Deal, Say Haulers
(Reuters) – Exports from Britain to the European Union fell by 68% in January as trade was disrupted after the end of a transition period following Britain’s departure from the European Union, according to a trade body representing haulers. The government did not confirm the data and said disruption at the border had been minimal since Britain completed its journey out of the EU’s orbit at the of 2020 following an agreement on trading arrangements.
By 【Financial Team-Rosy Cloud】
News Collection: Totoro 、文罡、Kate