Liu Xiaobo Interpret Stock Market And Control Investment Direction

China will allow direct debt to equity swap between commercial banks and debt companies to help banks curb the rising rate of non-performing assets. China's proposed new debt to equity swap program will be specially approved by the State Council to break through the commercial banking law.

The fusion of heavy industries listed in Hongkong (now renamed Huarong energy) is a typical case. The main business was originally shipbuilding, and later turned to oil, natural gas and other energy industries, and the debt burden was heavy. The company issued a notice on March 8th that it intends to issue up to 17 billion 100 million shares of debt to creditors and offset the total debt to 17 billion 100 million yuan. The debt to equity investors include 22 creditor banks and 1000 suppliers.

According to the report of "Caixin", the Bank of China has become Huarong energy by means of debt to equity swap. Largest shareholder The shareholding ratio will be as high as 14%.

What does this mean? It's right. China's economy And what will the capital market mean?

1, debt to equity swap is actually "loan to equity swap". The news is still not officially confirmed, but I personally think it is more likely to be launched because of the successful precedent of 1999. This is similar to the loan that local governments owed to banks last year and converted to medium and long term bonds.

2. Asia financial crisis After that, in order to achieve three years' escape from the difficulties of state-owned enterprises, Zhu Rongji, who served as prime minister at that time, made three major moves: "debt to equity swap", and the use of treasury bonds to support enterprise technological spanformation and enterprise listing and financing. The so-called debt to equity swap is to convert the huge loans owed by state-owned enterprises to banks into equity. To do so, on the one hand, let the large enterprises solve the difficulties, no longer undertake heavy repayment responsibility and huge interest; on the other hand, the bank's accounts are also refreshing, and the proportion of non-performing loans is substantially reduced. In that debt to equity swap, state-owned enterprises stripped 1 trillion and 400 billion of the bad assets.

3, in order to undertake the non-performing assets of the four major state-owned banks, in 1999, four major Asset Management Co, namely the Great Wall, XinDa, Huarong and orient, were established, which corresponded to the acquisition and management of NPL, CCB, ICBC and Bank of China. Then the four big Asset Management Co signed a debt to equity swap agreement with the debt company, and Asset Management Co became a shareholder. Asset Management Co acquired some of the money from bad loans from the state, partly from the central bank's refinancing, partly from low interest bonds issued to major banks. The sale of bad loans to Asset Management Co has quickly realized the clearing of bad loans on the books.

4, the relevant report said that "the State Council's special approval to break through the commercial banking law" and "direct shareholding by banks" may not be accurate. These shares may be held temporarily by banks, but will soon be resale to Asset Management Co. Of course, the shareholding of listed companies is more standardized and spanparent, and banks may hold for a long time. In addition, the debt to equity swap is certainly not limited to state-owned enterprises, and some large private enterprises can also get this opportunity, especially listed companies. Huarong energy is not state owned enterprise.

5, the move is good for the real economy. In order to prevent risks, big banks only do things that are icing on the cake. When the enterprise is in trouble, the bank must be forced to repay the loan. If there is no debt to equity swap, many large enterprises will have difficulty crossing the storm. The collapse of large enterprises will bring about a large area of unemployment, which will have a great impact on the economy. The above mentioned Huarong energy reorganization, if the plan is approved, will dissolve the debt of 17 billion 100 million yuan at once, which is a great advantage for the enterprise.

6, the move also makes a positive contribution to the banking industry, which can solve the concerns of the outside world about the rising rate of non-performing loans in China's banking sector. Bank stocks are the cornerstone of China's stock market. Stabilizing bank shares helps stabilize the stock market. Stabilize the banking industry, stabilize the stock market, and stabilize the whole society's confidence in the economy.

7, the recent bank stocks have two positive advantages, that is, the provision coverage rate may decline from the high level of 150%, the future may be 120%; in addition, the capital adequacy ratio requirements may also be reduced appropriately. In this way, we can significantly increase the profits of banks and reduce the pressure of operation. In March 4th, Yi Gang, vice president of the central bank, gave hints. He said: under the premise of supervision according to law, including capital adequacy ratio and provision coverage rate, there may be some considerations about the adverse economic cycle, but in general, it must be stable and high standard.