MNI China Press Digest May 2: Bank Risks, WMP Rules, Property

     BEIJING (MNI) - The following lists highlights from the Chinese press for

Wednesday:

     The financial sector should be regulated based on regulatory goals instead

of based on different sectors to offset regulatory arbitrage, Sun Guofeng, head

of the financial research institute under the PBOC said, China Securities

Journal reported. Three main factors cause financial risks according to Sun:

firstly, fragile liquidity in the banking system as the existence of shadow

banks conceals the real balance sheets of banks. Secondly, overexpansion of

assets, boosted by shadow banks, Sun said. Thirdly: the fact that bank loans

support transactions of existing assets, which can lead to asset bubbles, Sun

said.

     The buffer time for financial institutions to transform and change their

WMP businesses according to the finalized WMP rules was extended to two years

and a half, longer than the market expected, 21st Century Business Herald

reported. The rules clearly define standardized and non-standardized WMP

businesses and show that regulators are trying to tackle risks triggered by

non-standardized financial products, an unidentified WMP manager of a large

Chinese securities company told the newspaper. Former PBOC official told the

newspaper the rules show financial regulators do not want public funds to be

invested in non-standardized businesses, which could bring more risks and

intensify the shadow banking problem.

     The property market cooled during the Labor Day holiday, in contrast to

regular trends which tend to see more property transactions, Economic

Information Daily reported. Various property companies gave promotions for home

purchasers, yet this did not lead to a market rebound, the newspaper said. Data

from Centaline Group show residential property transactions in the largest

tier-one cities dropped more than 50% y/y to 360 units during the holiday, while

it was down around 30% in tier-two cities, the newspaper said. The market is

still sluggish although m/m growth of property transactions has recently been

rising in most cities, Zhang Dawei, chief analyst of Centaline Group was cited

as saying. 

***Comments: The recent m/m rebound of property sales, especially of residential

houses, shows hard demand for houses is still strong in China. However, with

tight controls still in place current market transactions can't truly reflect

the real demand and supply situation.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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