This document summarizes the emergence of China in global financial markets. It discusses the evolution of China's banking system from a mono-banking system to a two-tier system to today's system with over 35,000 banks. It also outlines China's growing use of derivatives like interest rate swaps and foreign exchange derivatives to manage risk. The document concludes by predicting trends in China toward more floating interest rates and use of derivatives to manage new risks as China's financial system continues to develop.
Market Research Report : Banking Industry in China 201Netscribes, Inc.
For the complete report, get in touch with us at : info@netscribes.com
Netscribes (India) Pvt. Ltd., a knowledge consulting solutions company, announces the launch of its Banking Industry in China 2011 report covering an industry with strong growth potential. Supportive regulatory policies and control are strongly benefiting the development of this market. The entry of foreign players also propels the growth of this sector making it one of the leading markets in the global scenario. China Banking Regulatory Commission (CBRC) has helped banks to successfully broaden their business through an increase in non-interest income lately by introducing a number of pilot programmes. From an international perspective, Chinese banks have continued their international expansion largely through organic growth via the opening of international branches and subsidiaries.
The report begins with an introduction to the banking industry in China, distinguishing the regulatory bodies and the various types of banks. The industry overview section begins with an insight into the overall banking industry in China along with its segmentation. It further delves into the total deposits and loans, total assets and liabilities and owner’s equity of banking institutions in China.
This is followed by a section on key performance indicators, evaluating the industry’s performance on the basis of key financial ratios specific to banks. It covers loan-to-deposit ratio, capital adequacy ratio, non-performing loan ratio, provision coverage ratio and profitability.
Foreign ownership in China’s banking industry has been covered along with growth of foreign institutions and their assets, segmentation, performance of foreign banking institutions, major foreign investments by Chinese banks and major foreign investments in Chinese banks. It also covers entry strategies for foreign players, typical acquisition process, and major acquisition challenges and solutions for foreign players.
An analysis of macroeconomic policies explains the industry’s significance on an economic basis and includes macroeconomic environment of China’s banking sector, adjusting the pace of credit supply, supporting economic restructuring and industrial upgrading, and participating in national policy formulation.
This is followed by the banking reform development section which covers China’s banking reform development, segment-wise reform policies, opening up of the banking sector, financial innovation and regulation, and implementation of BASEL II and BASEL III norms.
The future outlook section highlights the scope for the banking sector in the near future and includes supervisory focus of CBRC in 2011, medium-to-long term banking sector outlook and mitigation of risks in the banking sector.
The competitive scenario in the Chinese banking industry includes brief profile of the major domestics and foreign banks in China (including the “Big Four” banks).
Market Research Report : Banking Industry in China 201Netscribes, Inc.
For the complete report, get in touch with us at : info@netscribes.com
Netscribes (India) Pvt. Ltd., a knowledge consulting solutions company, announces the launch of its Banking Industry in China 2011 report covering an industry with strong growth potential. Supportive regulatory policies and control are strongly benefiting the development of this market. The entry of foreign players also propels the growth of this sector making it one of the leading markets in the global scenario. China Banking Regulatory Commission (CBRC) has helped banks to successfully broaden their business through an increase in non-interest income lately by introducing a number of pilot programmes. From an international perspective, Chinese banks have continued their international expansion largely through organic growth via the opening of international branches and subsidiaries.
The report begins with an introduction to the banking industry in China, distinguishing the regulatory bodies and the various types of banks. The industry overview section begins with an insight into the overall banking industry in China along with its segmentation. It further delves into the total deposits and loans, total assets and liabilities and owner’s equity of banking institutions in China.
This is followed by a section on key performance indicators, evaluating the industry’s performance on the basis of key financial ratios specific to banks. It covers loan-to-deposit ratio, capital adequacy ratio, non-performing loan ratio, provision coverage ratio and profitability.
Foreign ownership in China’s banking industry has been covered along with growth of foreign institutions and their assets, segmentation, performance of foreign banking institutions, major foreign investments by Chinese banks and major foreign investments in Chinese banks. It also covers entry strategies for foreign players, typical acquisition process, and major acquisition challenges and solutions for foreign players.
An analysis of macroeconomic policies explains the industry’s significance on an economic basis and includes macroeconomic environment of China’s banking sector, adjusting the pace of credit supply, supporting economic restructuring and industrial upgrading, and participating in national policy formulation.
This is followed by the banking reform development section which covers China’s banking reform development, segment-wise reform policies, opening up of the banking sector, financial innovation and regulation, and implementation of BASEL II and BASEL III norms.
The future outlook section highlights the scope for the banking sector in the near future and includes supervisory focus of CBRC in 2011, medium-to-long term banking sector outlook and mitigation of risks in the banking sector.
The competitive scenario in the Chinese banking industry includes brief profile of the major domestics and foreign banks in China (including the “Big Four” banks).
Today bankers and other financial service managers have learned to look at their asset and liability portfolios as an integrated whole. This type of coordinated and integrated decision making is known today as asset-liability management (ALM). This thesis is prepared on ‘The Hong Kong and Shanghai Banking Corporation’- HSBC, in Bangladesh. With its symbol of a Hexagon and the illustrative theme ‘The world’s local bank’ –HSBC is known to a lot of countries and territories of the world as a leading financial service institution. Although the history of its operation in our country is relatively new, yet HSBC already commands a great deal of respect and reputation in our banking community.
Every Financial Institute irrespective of its size is generally exposed to market liquidity and interest rate risks in connection with the process of Asset Liability Management. Failure to identify the risks associated with business and failure to take timely measures in giving a sense of direction threatens the very existence of the institution. It is, therefore, important that the strategic decision makers of an organization assume special care with regard to the Balance Sheet Risk management and should ensure that the structure of the institute’s business and the level of Balance Sheet risk it assumes are effectively managed, appropriate policies and procedures are established to control the direction of the organization. The whole exercise is with the objective of limiting these risks against the resources that are available for evaluating and controlling liquidity and interest rate risk.
Today bankers and other financial service managers have learned to look at their asset and liability portfolios as an integrated whole. This type of coordinated and integrated decision making is known today as asset-liability management (ALM). This thesis is prepared on ‘The Hong Kong and Shanghai Banking Corporation’- HSBC, in Bangladesh. With its symbol of a Hexagon and the illustrative theme ‘The world’s local bank’ –HSBC is known to a lot of countries and territories of the world as a leading financial service institution. Although the history of its operation in our country is relatively new, yet HSBC already commands a great deal of respect and reputation in our banking community.
Every Financial Institute irrespective of its size is generally exposed to market liquidity and interest rate risks in connection with the process of Asset Liability Management. Failure to identify the risks associated with business and failure to take timely measures in giving a sense of direction threatens the very existence of the institution. It is, therefore, important that the strategic decision makers of an organization assume special care with regard to the Balance Sheet Risk management and should ensure that the structure of the institute’s business and the level of Balance Sheet risk it assumes are effectively managed, appropriate policies and procedures are established to control the direction of the organization. The whole exercise is with the objective of limiting these risks against the resources that are available for evaluating and controlling liquidity and interest rate risk.
The PowerPoint presentation delves into the Silicon Valley Bank crisis, offering a comprehensive analysis of the challenges that unfolded and their subsequent implications. Beginning with an introduction to Silicon Valley Bank's pivotal role in the technology and innovation sector, the presentation establishes a detailed timeline of events leading up to and during the crisis. A critical examination of the root causes, both internal and external, sheds light on the factors that precipitated the turmoil. The subsequent slide explores the far-reaching impact of the crisis on Silicon Valley's ecosystem, affecting startups, venture capital, and the broader technology industry. Regulatory responses and changes in oversight following the crisis are discussed, providing insights into the evolving landscape of financial regulations. The presentation also reflects on the lessons learned from the crisis, both for Silicon Valley Bank and the industry at large, and examines the strategies employed for recovery. Industry-wide implications, future outlook, and ongoing challenges are presented to provide a holistic understanding of the crisis's enduring effects. The presentation concludes by inviting questions and fostering discussion, encouraging participants to contribute to the discourse on the Silicon Valley Bank crisis.
Original AeFT SwapRent paper written by Ralph Y Liu in 2006Ralph 刘冶民 Liu
This is the original creation paper on SwapRent and its related new economic concepts and financial methods. It is technical in nature and was written for patent application to be used from a manufacturing and risk management perspective for financial institutions.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how can I sell my mined pi coins profitabily.DOT TECH
Even tho. Pi is not launched yet on any exchange worldwide. You can easily sell your mined pi coins for cash or other cryptocurrencies, Through verified vendors/merchants
Who is a pi vendor?
A pi vendor is a person, that buys pi coins from miners and resell them to Investors interested in holding pi coins till mainnet launch in 2026…
I will leave the whatsapp contact of my personal pi vendor. Highly recommendable…………
@Pi_vendor_247
#pi network
#pi coins
#money
how can I transfer pi coins to someone in a different country.DOT TECH
The answer is yes.
You can easily transfer pi network coins to any user in any country. All the receiver needs is the kyc verified and mainnet approved wallet to recieve the coins.
How to sell pi coins?
If you are looking forward to sell. I will leave the telegram contact of my personal pi vendor:
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
is it possible to sell pi network coin in 2024.DOT TECH
If you are in urgent need to do something which requires money. And you want to sell your pi network coins. I would advise you sell a portion of it Not all , so you can still cash out big when it's launched later. I will leave the telegram contact of my personal pi vendor.
@Pi_vendor_247
how can i trade pi coins for Bitcoin easily.DOT TECH
Pi is not launched yet on any exchange, it is not sellable, but you can actually exchange your I network coins to other currencies. By selling your pi network coins to investors and holders of the coins.
How can I find a pi network investor
Lol, you don't need to find a investor all you have to do is to sell your pi coins to a vendor [ buys from miners and resells to the holders]
I will leave the whatsapp contact of my personal pi network vendor to trade Pi coins with.
@Pi_vendor_247
#pi network
#pi
#passive income
#legit
#bitcoin
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
USDA Loans in California: A Comprehensive Overview.pptx
AeFT - ISDA 2006 AGM Keynote Speech in Singapore
1. The Emergence
of China in the Global
Financial Markets
Ralph Y. Liu
Chairman/CEO
Advanced e-Financial Technologies, Inc.
http://www.InvestorsAlly.com
Slide 1 The Emergence of China in the Global Financial Markets
2. Presenter Bio
Ralph Yiehmin Liu is currently the Chairman/CEO of California-based AeFT (Advanced e-Financial Technologies,
Inc. - http://www.InvestorsAlly.com ). AeFT pioneers in the development of an exchange as well as an OTC
market for real estate index futures, swaps and options. It also conducts the OTC derivatives trading/market
making activities through joint ventures with local banks in emerging markets such as China. Previously he was
the Chief Investment Officer of China Everbright Bank based in Beijing where he brought the first CNY-
denominated interest rate swap to the domestic Chinese banking world. He also designed and launched the
long term fixed rate bank loans for the bank to both individual and corporate borrowers in the country. Ralph
built and ran a successful Singapore-based derivatives trading/risk management consulting company in the 90’s
called ARMS (Advanced Risk Management Solutions, Pte. Ltd.). In his earlier years as a derivatives banker in
Asia, he was a Vice President with UBS based in Singapore as well as the Managing Director of Chase
Manhattan Asia Limited based in Hong Kong. Ralph acquired his earlier training in financial derivatives and
capital markets sales and trading through working at many prestigious Wall Street institutions such as Morgan
Stanley, Chemical Bank and Equitable Life, all based in New York. Ralph received his MBA in 1987 from the
Wharton Business School after completed many other graduate degrees in science and engineering from many
top American universities (Penn, Michigan, Rice). Ralph was born in Taiwan but currently holds US and EU
citizenships as well as a PR in Australia, Singapore and Hong Kong. He lives in Rancho de Liu in Southern
California with his wife, daughter, son & Arabian horses.
http://www.InvestorsAlly.com
Slide 2 The Emergence of China in the Global Financial Markets
3. China calling…..
http://www.InvestorsAlly.com
Slide 3 The Emergence of China in the Global Financial Markets
4. The Evolution of the Banking Industry in China
1940 1950 1960 1970 1980 1990 2000
Mono banking system 1949
Chairman Mao creates the
People’s Bank of China (PBOC) 70’s / early 80’s
which plays the threefold role of
central bank, national
treasury and state lender.
Two tier banking system
Four state-owned specialized
banks are established leading to
80’s / 90’s
the creation of a two-tier banking
system with the PBOC acting as
a central bank.
Commercial banking system
Creation of city commercial banks, rural
credit cooperatives, asset management
companies … leading to more than
35,000 banks today.
CBRC was
http://www.InvestorsAlly.com founded in 2003.
Slide 4 The Emergence of China in the Global Financial Markets Slide Source: Reuters
5. Recent Investments in Chinese Banks by Foreign Entities
Chinese
Foreign Investments When
Banks
CCB BOA, Temasek Sep, 2005
BOC RBS, Temasek, UBS, ADB Aug, 2005
ICBC GS, Allianz, American Express Jan, 2006
HXB DB Oct, 2006
SDB New Bridge Capital, GE Sep, 2005
SPDB Citibank 2003
GDB Citibank, Carlyle Group Pending
NJCB BNP Oct, 2005
NBCB OCBC Jan, 2006
http://www.InvestorsAlly.com
Slide 5 The Emergence of China in the Global Financial Markets
6. On-shore Foreign Currency Derivatives Activities
Investment Plans (Retail Deposit-based Investment
Funds)
• RMB Size: 25 Billion RMB (CEB)
• USD Size: 1.2 Billion USD (CEB)
Foreign Currency Debt Risk Management
• 2005 Derivatives Transaction Notional Amount ~ 20 Billion USD
• 2005 End of Year Foreign Debt Balance ~ 10 Billion USD
FX Options, IRS/CCS, Structured Credit Products &
Equity-Linked Notes
http://www.InvestorsAlly.com
Slide 6 The Emergence of China in the Global Financial Markets
7. Domestic Interest Rate Markets
Banking Book
Rates on all loans & deposits are controlled by PBOC.
Trading Book
Rates are determined by close to a market mechanism.
Arbitrage Opportunities
http://www.InvestorsAlly.com
Slide 7 The Emergence of China in the Global Financial Markets
8. RMB Interest Rates
http://www.InvestorsAlly.com
Slide 8 The Emergence of China in the Global Financial Markets Data Source: Bloomberg
9. Chinese RMB Treasury Yield Curve
Maturity 02032006 24022006
2006年2月24日
年 月 日
1Y 1.6283 1.5558
2Y 1.8345 1.8042
2006年3月2日
年 月 日
3Y 2.0399 2.0383
5Y 2.4050 2.4319
7Y 2.6585 2.6902
10Y 2.9197 2.9474
15Y 3.2696 3.2899
20Y 3.4979 3.5119
http://www.InvestorsAlly.com
Slide 9 The Emergence of China in the Global Financial Markets
10. Chinese RMB Repo Rates
Maturity 02032006 20060224
1D 1.3392 1.275
2006年3月2日
年 月 日 2D - -
3D - -
4D - -
7D 1.3939 1.3157
14D 1.4279 1.4004
21D 1.539 1.393
1M 1.5956 1.55
2006年2月24日
年 月 日
2M 1.92 -
3M - -
4M - -
6M - -
9M - -
1Y - -
http://www.InvestorsAlly.com
Slide 10 The Emergence of China in the Global Financial Markets
11. Domestic Debt Issuance
Treasury (MOF)
• 2005 Issued Amount: 504.20 Billion RMB
• 2006 Planned Issuance: 710 Billion RMB
Financial Bonds
(China Development Bank, China EXIM Bank, Agricultural Development Bank)
• 2005 Issued Amount: 590.17 Billion RMB
CDB EXIM ADB
Volume 325 bn RMB & 1.13 bn USD 40 bn RMB 200.17 bn RMB & 0.5 bn USD
Commercial Paper Market
• 2005 Issued Amount: 135 Billion RMB
• 2006 Planned Issuance: 400 Billion RMB
http://www.InvestorsAlly.com
Slide 11 The Emergence of China in the Global Financial Markets Data Source: www.chinabond.com.cn
12. Mortgage Markets and State of MBS/ABS in China
Residential Mortgage Loans
• Loan rates are published by PBOC periodically.
• Starting from Mar 17th, 2005, loan rates are controlled only by lower limits.
JianYuan MBS 0501: 15th Dec, 2005, China Construction Bank
• Issued Amount: 3,016,638,183 Yuan RMB
• Tranches: A, B, C & S (90,500,638 Yuan RMB, Private Placement)
•
KaiYuan ABS 0501: 15th Dec, 2005, China Development Bank
• Issued Amount: 2,924,089,000 Yuan RMB
• Tranches: A, B & Secondary Tranche (250,636,200 Yuan RMB, Private
Placement)
http://www.InvestorsAlly.com
Slide 12 The Emergence of China in the Global Financial Markets
13. Bringing Risks to the Chinese Banking World
RMB Fixed Rate Loans
• Individual Residential Loans: 5-yr 5.94%, 10-yr 6.18%
• Commercial Mortgage Loans: 5-yr 6.18%, 10-yr 6.42%
RMB Interest Rate Swaps
• For Bank’s Asset/Liability Management
• Notional Amount: 5 Billion RMB
• Tenor: 10 Years
• CEB pays fixed rate: 2.95%
• CDB pays floating reference index rate: One Year Deposit Rate
(currently 2.25%)
http://www.InvestorsAlly.com
Slide 13 The Emergence of China in the Global Financial Markets
14. The Swap
Benchmark Bonds
• CDB 10-yr Fixed Rate Bond: 3.20%
• CDB 10-yr Floating Rate Bond: 1-yr Deposit Rate + 45 b.p.
10-yr, 5 Billion RMB
Fixed Rate: 2.95%
China China
Everbright Development
Bank Floating Rate Reference Index : Bank
1 Year Deposit Rate
Hedges
• CDB 050223 3 Billion 3.6000% 15-yr
• CDB 050214 1 Billion 3.4154% 10-yr
• CEXIMB 050302 1 Billion 2.8510% 10-yr (Remaining Maturity: 7-yr)
http://www.InvestorsAlly.com
Slide 14 The Emergence of China in the Global Financial Markets
15. Which Floating Rate Reference Index to Use
1-yr Depo : The One Year Deposit Rate
• Banks, Corporates
R007 : The 7-day Repo Rate
• Fixed Income Fund Managers, Securities Companies
1-yr CP : The One Year Commercial Paper Rate
• Corporates
http://www.InvestorsAlly.com
Slide 15 The Emergence of China in the Global Financial Markets
16. How the Interest Rate Risk Is Transferred
Long Term
Fixed Rate
Borrowers China
Everbright
Bank China
Development
Bank Long Term
Fixed Rate
Investors
http://www.InvestorsAlly.com
Slide 16 The Emergence of China in the Global Financial Markets
17. Historical RMB Loan/Depo Interest Rates
One - Year Deposit Rates One - Year Lending Rates
Date Rate Date Rate Date Rate Date Rate
1989 8.64 1997 9.18 1989 9 1997 10.98
1989 11.34 1997 7.47 1989 11.34 1997 10.98
1990 10.08 1997 5.67 1990 10.08 1997 8.64
1991 8.64 1998 5.22 1991 9.36 1998 7.92
1991 7.56 1999 4.77 1991 8.64 1999 6.93
1994 9.18 1998 3.78 1994 9.36 1998 6.39
1994 10.98 2000 2.25 1994 10.98 2000 5.85
1995 10.98 2002 1.98 1995 10.98 2002 5.31
1996 10.98 2004 2.25 1996 12.06 2004 5.58
http://www.InvestorsAlly.com
Slide 17 The Emergence of China in the Global Financial Markets
18. Historical RMB Loan/Depo Interest Rates
One to Three - Year Lending Rate Five - Year Lending Rate
Date Rate Date Rate Date Rate Date Rate
1989 9 1997 13.14 1989 13.32 1997 15.12
1989 12.78 1997 10.98 1989 19.26 1997 12.42
1990 10.8 1997 9.36 1990 11.88 1997 10.53
1991 10.08 1998 9 1991 11.16 1998 10.35
1991 9 1999 7.11 1991 9.72 1999 8.01
1994 10.8 1998 6.66 1994 12.24 1998 7.56
1994 12.24 2000 5.94 1994 14.04 2000 6.21
1995 12.96 2002 5.49 1995 14.76 2002 5.76
1996 13.5 2004 5.76 1996 15.3 2004 6.12
http://www.InvestorsAlly.com
Slide 18 The Emergence of China in the Global Financial Markets
19. Financial Market Innovations in 2005
Mar 21th, 2005: PBOC Officially Grants Permission for Trial Issuance
of ABS/MBS.
Apr 21th, 2005: < Experimental Administrative Rules on Assets
Backed Securities >
May 21th, 2005: Bond Forwards Transaction
• <Administrative Rules on Bond Forwards Transactions in the National Inter-
Bank Bond Market>
May 23th, 2005: Issuance of Commercial Papers
• <Administrative Rules for the Issuance of Commercial Paper in the National
Inter-Bank Bond Market>
Jul 21th, 2005: Formation of A New RMB Currency Regime
Aug 2th, 2005: RMB FX Forwards & Swaps against Foreign
Currencies
http://www.InvestorsAlly.com
Slide 19 The Emergence of China in the Global Financial Markets
20. Chinese “Won” ?
http://www.InvestorsAlly.com
Slide 20 The Emergence of China in the Global Financial Markets
21. Currency Manipulator?
http://www.InvestorsAlly.com
Slide 21 The Emergence of China in the Global Financial Markets
22. Trends in 2006 and Beyond
Foreign Exchange: from Fixed to Floating
• FX Forwards
• FX Swaps
• FX Options
Interest Rates: from Floating to Fixed
• Interest Rate Swaps
• Caps/Floors
http://www.InvestorsAlly.com
Slide 22 The Emergence of China in the Global Financial Markets
23. Pre-payment Risk - Negative Convexity
P
http://www.InvestorsAlly.com
I
Slide 23 The Emergence of China in the Global Financial Markets
24. “Risk is not necessarily a bad thing.”
“Where there is a duration (long term fixed interest rate risk)
mismatch, there will be a need for IRS for the banks!”
“Where there is prepayment risk on the asset book, banks will
have more motivation for MBS issuance”
http://www.InvestorsAlly.com
Slide 24 The Emergence of China in the Global Financial Markets
25. Next Chapter
The New Shanghai-based Financial Derivatives Exchange
• Stock Index Futures
• Bond Futures
• Currency Futures
RMB Derivatives Trading/Market-Making Joint Venture
• First AAA-rated Swapco in China
Real Estate Derivatives?
http://www.InvestorsAlly.com
Slide 25 The Emergence of China in the Global Financial Markets
26. Real Estate Derivatives
Background
• The real estate market is currently the world’s largest financial market.
• The homeowners everywhere still can not hedge the equity value in their homes.
AeFT’s REIFO (Real Estate Index Futures & Options) Exchange – A US Properties Market Example
• To facilitate the buying and selling of futures contracts by both homeowners and
institutional traders/investors based on real estate valuation per square foot for each
zip code area.
• 3, 6, 9, 12, 15, 18, 21, 24 ... 60 - month contracts based on existing popular per square
foot median price indexes published by industry data providers for each zip code
region throughout the country.
OTC Transactions Opportunities
• AeFT’s Residential Real Estate Index Swaps & Options (REIDeX)
• NCREIF Index Swap on Commercial Properties Done on Feb 24th by CS.
http://www.InvestorsAlly.com
Slide 26 The Emergence of China in the Global Financial Markets
27. Presenter Note
“I retain the copyrights of all the data and information in this
presentation where applicable. However, you are welcome to
use any of these material in whole or in parts, as long as a
permission is sought prior to your use. I could be reached at
the following email address. Thank you.”
Ralph Y. Liu
ralph.liu.wg87@wharton.upenn.edu
http://www.InvestorsAlly.com
Slide 27 The Emergence of China in the Global Financial Markets