Pension Fund to Enter Market to Rescue Chinese A Shares

China's massive pension fund will begin investing in China's A-share markets this year, injecting USD$92.28 billion into the equity market and likely improve its liquidity. Researchers said it will take time for all of the investible portion of the pension fund to become fully injected into the equity market. Provinces that have already piloted their local pension funds to be invested in the equity market have reported positive yields. South China's Guangdong province reportedly accrued a combined yield of 17.34 billion yuan from a 100-billion-yuan investment. This news gives renewed life to a stock market that has taken many blows in recent months.

China Making a Push for Alternative Energy in its 13th Five-Year Plan

In the coming up months, China will roll out its 13th Five-Year Plan for the energy sector. Future energy development will focus more on quality and efficiency, moving away from traditional energy. Cutting overcapacity will be the top priority in the next five years, he said. For the next 3 years, new projects that explore traditional energy, such as coal, thermal power, oil refining and chemicals will not be approved. China is trying to cut reliance on traditional energy resources, and grow its clean and renewable energy sectors - especially wind power, hydropower, solar and nuclear power.

China's Local Government Borrowing Restricted

China has banned local governments from borrowing from banks to finance land purchases and preparations for property development. The plan is for local governments to reduce the number of institutions responsible for land reserve, whittling down the many departments to just one. Land reserve institutions should no longer have financing, construction or land development arms, these departments should be closed or turned into enterprises by the end of this year.

Chinese Economy Slowing...Creating Opertunities

According to numerous Chinese financial experts, the Chinese economy will face greater uncertainty in 2016. The prospects of global economy recovery are still unclear. If the US Federal Reserve raises interest rates continuously, it will cause emerging economies to suffer capital outflow and local currency depreciation. China is under pressure of de-capacity and industrial deflation, and whether real estate investment will stabilize remains uncertain. Among these factors, the stabilization of the Chinese economy will depend more on global economic recovery, the Fed rate hike and domestic real estate investment, as excess capacity cannot be reduced in the short term. Economists forecasts that the economy will grow at 6.7 percent this year with further downward pressure in the first six months. But the economy will stabilize after the second quarter, as the government will strengthen the current fiscal and monetary policies and the previous policies will take effect gradually. More than likely, Chinese government will continue to depreciate the RMB to possibly 7.5/1 (compared to USD) to stimulate the manufacturing industry and exports. This will mean a devaluing of Chinese assets. This is the perfect time to invest and prepare for a rebound in 2017.

Tighter Regulations for Payment Platforms in China

Starting July 1, 2016, China will tighten regulations on non-banking online payment platforms to to fight against financial fraud and money laundering. Now you have to open accounts with real names and identifications. China has also imposed a cap on maximum yearly payments through such platforms at 200,000 yuan ($30,910). According to the new policy, for example, each account on WeChat can transfer at most 1,000 yuan through the "Lucky Money" function. If more money needs to be transferred, the users must provide three to five ways to verify identity, including bank accounts, driving license and social security ID.

China Promoting PPP Structure

To support public-private partnership (PPP) projects China will provide a 180 billion yuan rewards pilot program that will start in 2016. The private partners in the PPP projects will be offered three-tier rewards based on the investment scale. For a PPP project with investment of under 300 million yuan ($46.3 million) the central government will provide 3 million yuan in reward; for a project between 300 million yuan and 1 billion yuan, the reward will be 5 million yuan; and for a project above 1 billion, the reward is 8 million yuan. It also encourage uncompleted locally-funded public service projects to transform into PPP model projects. For those successfully transformed projects, the central government will also provide rewards. The reward scale will be 2 percent of the debt reduction the transformation brought to the local government. This move will help ease the local government debt problem in China, while at the same time stimulating the Chinese economy to reach a goal of 7% GDP growth in 2016. This is also a great opportunity for investors looking to invest with the local government (a less risky investment in China).

China to Launch Registration-Based IPO in 2016

On Sunday, the country's top legislature authorized the roll out of the new IPO registration mechanism to complete the amendment of the Securities Law. In a statement by the China Securities Regulatory Commission, officials said the legislative approval of launching the registration-based IPO system marked significant development to the Chinese capital market and implements an important measure to allow the market force to determine the allocation of resources. It is not merely about delegating the IPO approval power to the stock exchanges but a major transformation of the regulator's role, the registration-based IPO system will emphasize the information disclosure rather than corporate prospect and profitability. The regulator said that it will no longer endorse the value of prospective companies under the new system but it will still control the pace and pricing of IPOs to maintain market stability.