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Dongguan to become a financial power through financial innovation
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www.timedg.com Dongguan is currently accelerating the process of high-quality development, which relies on reform and innovation. Meanwhile, financial innovation has become an increasingly important link in invigorating the economy and guarding against financial risks, with a growing role to play and contribution to make in innovation-driven development. Therefore, focusing on promoting financial innovation is essential for reviving Dongguan’s economy and enhancing its competitive edge.

Following its previous proposal to increase the added value of the financial sector to more than 8% of the city’s GDP by 2020, Dongguan is now fully promoting financial innovation toward the goal of transforming from a “big financial city” into a strong one.

The financial industry has been going all out to nourish the real economy

For years, Dongguan’s financial sector has been nourishing the real economy just like the water moistening the trees by catering to the financial service needs of key and weak areas of the substantial economy, such as the emerging sectors of strategic importance, advanced manufacturing industry, modern service industry, S&T innovation, green economy, small and micro businesses, as well as agriculture, rural areas and rural residents. In doing so, it has provided all-out support to social and economic transformation of Dongguan. While advancing the real economy, the financial sector has created greater space for its own development.

Soon after Dongguan launched the Multiplication Plan for enterprises last year, many financial institutions took immediate actions to expand their services into the emerging financial sector. In doing so, they aim to assist key industries and the economy in multiplying themselves.

For instance, Dongguan Financial Holding Group Co., Ltd. has set up a 5-billion industrial investment master-feeder fund, a 10-billion TFG-Dongguan technology innovation equity investment FOF and a one-billion multiplication preferred equity investment fund through partnership with Shenzhen Capital Group Co., Ltd., the Technology Financial Group(TFG) and related town and sub-district (or industrial park). These funds have been established in order to boost the emerging sector and industrial distribution. While increasing their capital strength by going public and establishing branches in pilot free trade zones, Bank of Dongguan, DRC Bank and Dongguan Securities have also worked with key enterprises to set up merger and acquisition fund series to promote investment linkage financing service.

Last year, Dongguan used the 90-million-per-year loan discount funds from the municipal Financial Bureau to encourage 18 experimental units to promote a number of unsecured credit loans such as Beizeng Loan, Yunshui Loan. As a result, these banks issued loans of more than 6 billion RMB to approximately 900 small and medium-sized technology innovation enterprises, reversing negative loan growth in the manufacturing sector.

According to data provided by the Bureau of Financial Work of the People’s Government of Dongguan City, by the end of 2017, loan balance for enterprises of the Multiplication Plan across the city was 28.51 billion RMB, an increase of 19.1% from the beginning of the year. The growth rate is 2.84 times that of all loan balance of the city in the same period. 7 listed enterprises and 4 New Third Board listed enterprises have been newly included as enterprises of the Multiplication Plan, obtaining up to 5.2 billion RMB in direct financing.

This year the support of Dongguan’s financial sector to the real economy has continued as the Multiplication Plan advanced to quickly make technology, finance and industry the most active factors of the society. Data from the Bureau of Financial Work of the People’s Government of Dongguan City shows that, by the end of last year, Dongguan has seen the move-in and registration of 153 equity investment institutions and 387 funds, beating all other prefecture-level cities in the South China region. This indicates increasing support of the financial sector to scientific and technological development.

Dongguan is already home to 27 A-share listed companies

March 28th saw the birth of Dongguan’s 27th A-share listed company as Guangdong Great River Smarter Logistics Co., Ltd. held its listing ceremony at the Shenzhen Stock Exchange for being officially listed on the SME board of A share.

During the past few years, Dongguan has introduced a host of incentive measures to help enterprises seek standardized development and grow stronger on the capital market, such as by offering monetary reward and opening up “green channel” for enterprise listing. These measures have obviously expanded the channels of direct financing from the society.

Last year, Dongguan witnessed the listing of a record 10 enterprises in China and overseas, ranking the 1st among all prefecture-level cities in South China. There were 202 enterprises listed on the New Third Board, the largest of all prefecture-level cities in South China and the 3rd largest in the whole of China. In excess of 500 enterprises got listed on regional equity markets as well. In addition, the cluster effects of carriers like Zhongchuang Financial Street and Songshan Lake Fund Town have been enhanced, which facilitated the move-in of 153 fund management agencies, speeding up the development of a number of manufacturing enterprises.

According to relevant regulations Dongguan has previously introduced, a to-be-listed enterprise applying for IPO on domestic and overseas stock exchange can receive a one-off bonus of 2 million RMB after the application materials have been officially accepted for processing; an enterprise listed on the National Equities Exchange and Quotations (or the “New Third Board”) can receive a monetary reward of up to 500,000 RMB. To be specific, those listed on the New Third Board can receive a one-off bonus of 200,000 RMB each while those eventually listed on the innovation category of the New Third Board can receive an additional one-off bonus of 300,000 RMB each.

In order to motivate enterprises to get listed, incentives have also been given to listed enterprises. For example, an enterprise that has been successfully listed on domestic or overseas stock exchange will be given 0.5% of the amount raised during the IPO as reward, up to a max. of 5 million RMB; where an enterprise listed on the National Equities Exchange and Quotations has raised funds through direct financing, it will receive 1% of the amount initially raised as reward, up to a max. of one million RMB.

The full release the bonus policy has ushered in the best opportunity for Dongguan-based enterprises to access the capital market. According to data from the Bureau of Financial Work, as of now, Dongguan has up to 45 listed enterprises, including 27 listed in China and 18 listed overseas. Another 3 enterprises have submitted their application materials to China Securities Regulatory Commission (CSRC) while 16 have been filed with the Guangdong Bureau of the China Securities Regulatory Commission. Moreover, 182 enterprises have been recognized as to-be-listed enterprises. Thus a reasonable stepped listing structure has been formed.

According to what the reporter has learned, the Bureau of Financial Work of the Municipal People’s Government is gathering views from all sectors of the society and working out new support policies to continue guide and serve the listing of enterprises and allow more local enterprises to grow on the capital market.

Fully promoting financial innovation and development

At the moment, construction of a comprehensive pilot zone for finance-technology integration and innovation is gaining momentum and initial results have been achieved in the transformation from a big financial city into a strong one. In its written reply to the reporter, the Bureau of Financial Work of the Municipal People’s Government said that it will study and carry out the essence of both important speeches by President Xi Jinping and the 19th CPC National Congress, and work with the financial management department of the Central Government in Dongguan to build a new type of high-level financial supply and improve the service capability of modern finance.

Innovation is the primary driving force for development and for this reason, Dongguan will fully promote financial innovation and development in the years to come. According to plan, Dongguan will increase the added value of its financial sector to more than 8% of the city’s GDP by 2020. By then, the total number of financial institutions and quasi-financial institutions will be over 300 and total asset of these financial institutions will surpass 2 trillion RMB. Dongguan will have its own pool of listed enterprises as well. By that time, Dongguan will stand as a strong financial city rather than a big one.

According to the People’s Bank of China Dongguan Center Sub-branch, Donggguan needs to focus on the development need of the real economy. In regard to the strategic plan of the Guangzhou-Shenzhen Science and Technology Innovation Corridor, and the development of intelligent equipment manufacturing and green ecology, Dongguan shall see that financial institutions stay monetary and industrial policy-oriented and develop new financial products and services in the area of industrial finance, technology finance, green finance and sharing finance to resolve insufficient financial innovation in the real economic sector. Meanwhile, Dongguan shall strengthen risk assessment and supervision of various types of financial innovation so as to effectively guard against regulatory arbitrage.

The Bureau of Financial Work of the Municipal People’s Government indicates that it will seize the opportunity of outward expansion of industry and capital in Guangzhou and Shenzhen to focus on building Zhongchuang Financial Street, Longwan Wutong Capital Town and Songshan Lake Fund Town into highly-functional fund industry clusters that are under coordinated development, in line with the region-based coordinated development strategy. In this way, an efficient investment-financing matching mechanism can be created to offer layered financial services to enterprises at different stages of development, from seedling to incubation and rapid expansion.

Apart from that, Dongguan will focus more on developing and utilizing the multi-level capital market to establish a multilayered government-guide fund system that boasts an operator, financial support and systematic planning. In doing so, it aims to support more quality enterprises to achieve direct financing by going public, increasing capital and shares and issuing corporate bonds.

In addition, Dongguan as the leading area of Guangdong Province will take advantage of its geographic location to push forward the comprehensive pilot program on the construction of a new, open economic system. It will open its financial sector further to the world, and learn good practices of pilot free trade zones. By making the most of the pilot policy, Dongguan will focus on building new systems and supports necessary for developing an open financial service industry so as to make itself a model and extension of the China (Guangdong) Pilot Free Trade Zone.

Basic Facts about financial development in Dongguan

As of the end of 2017, loan balance for enterprises of the Multiplication Plan across the city was 28.51 billion RMB, an increase of 19.1% from the beginning of the year. The growth rate is 2.84 times that of all loan balance of the city in the same period.

By the end of last year, Dongguan has seen the move-in and registration of 153 equity investment institutions and 387 funds, beating all other prefecture-level cities in the South China region.

By the end of March this year, Dongguan has up to 44 listed enterprises, including 27 listed in China and 17 listed overseas. As many as 182 enterprises have been recognized as to-be-listed enterprises.

Bonus: A to-be-listed enterprise applying for IPO on domestic and overseas stock exchange can receive a one-off bonus of 2 million RMB after the application materials have been officially accepted for processing. An enterprise getting listed on the New Third Board can receive up to 500,000 RMB as bonus.

 

Source: www.timedg.com

 

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