CHINA MONEY WEEK: STAR of the East Gets Underway

     LONDON (MNI) - The new STAR trading board, China's version of the U.S.

NASDAQ, went live this week, with volatility for the 25 stocks listed heightened

amid a lack of formal trading limits. Tighter restrictions go into play next

week, but the market should still remain more volatile than a typical western

offering.

     MSCI has noted that it is still assessing STAR stocks' eligibility for its

indices, believing that "more time is needed to monitor and assess the

implementation, trading and liquidity on the market. Securities trading on the

STAR market will not be added to the MSCI indices until MSCI completes its

assessment." 

     JPMorgan highlighted that MSCI is expected to provide further communication

before the November 2019 review.

     --BANKS

     Elsewhere in financial markets, the issues left behind by the recent state

takeover of Baoshang Bank are still evident.

     Bank of Jinzhou, an entity which suspended trading in its shares earlier in

2019 and saw its auditor resign, has revealed that it is in talks with multiple

parties for possible strategic investment, even though it suggested that it is

operating "normally."

     There hasn't been too much follow through in the repo market, yet. However,

it is worth flagging press reports noting that "China's banking and insurance

regulator is considering allowing big asset management firms to engage in

mergers and acquisitions of high-risk small and medium-sized Chinese banks."

     We will continue to be on the lookout for signals of stress in small and

medium Chinese lenders over the coming the months.

     --TRADE AND DATA

     Looking ahead to next week, the PMI data release provides headline risk,

but MANY eyes will be elsewhere.

     Messrs Mnuchin and Lighthizer will travel to meet with a familiar face in

Liu He, but he will be joined by the rumoured hardliner and Chinese Commerce

Minister Zhong Shan, who has only been party to a couple of conference calls in

the process thus far.

     It is also worth highlighting that the meeting will be held in Shanghai, as

opposed to the typical setting of Beijing. Some source reports have suggested

that President Xi Jinpeng will be in the region around the time of the meeting,

but we would suggest that any visit from Xi would likely be more of a show of

face, a smile for the cameras if you will, as opposed to indicating any real

change in tone in the short term.

     In terms of recent developments on the trade front, China has stressed that

its newly planned purchases of U.S. agricultural products have "no direct link"

to the agreement to resume face-to-face trade talks, but reflect commercial

decisions by individual Chinese buyers.

     One curve ball to keep a look out for is the impending Politburo gathering,

which is set to take place any day now.

     Have a great week, we hope to provide the "China Money Week" from the

streets of Beijing next Friday.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 380; email: anthony.barton@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,M$$FI$]