Chinese stocks edged down amid volatile trade, with the benchmark Shanghai index swinging the most since 1992, despite the rate cut announced over the weekend.
The Shanghai Composite Index slumped 3.3 percent to close at 4,053.03 on Monday, extending the loss from its peak on June 12 to more than 20 percent. The gauge swung between a loss of 7.6 percent and a gain of 2.4 percent within the market hours.
The Shenzhen Component Index sank 5.8 percent to 13,566.27 at the close.
"Interest rate cut and targeted reserved requirement ratio (RRR) cut simultaneously are a dramatic move. But the market has been anticipating such a move," said Hong Hao, chief strategist at BOCOM International Holdings, in a note released on Monday.
The People's Bank of China has lowered the RRR by half a percentage point and the benchmark interest rate for a third time this year by 25 basis points, announced the central bank on Saturday.
The one-year benchmark deposit rate has been lowered by 115 basis points since the beginning of this year and is now 2 percent, while that of the lending rate has been cut down by 100 basis points in total to 4.85 percent.
"Traders will likely seize the fleeting technical reprieve to exit their positions, and continue to induce short-term volatility," said Hong, adding that the outstanding balance of margin trades through non-brokerage channels can be double the official data of as high as 2 trillion yuan ($322.2 billion).
"The risk led by margin trading is manageable, as pressure tests have shown that the overall leverage ratio is still in check and below the cautious line," said a spokesperson of the China Securities Regulatory Commission in a written reply to media enquiries on Monday.
The forced closure of margin trades over the past two trading days via the HOMS system amounted to no more than 4 billion yuan, and another 2.2 billion yuan was closed on Monday morning, added the spokesperson.
The outstanding balance of margin debt on the Shanghai Stock Exchange fell for a fifth day as of Friday, according to the bourse's data.
Regulators are considering suspending initial public offerings to stabilize the country's tumbling stock markets, reported Bloomberg citing insiders familiar with the matter.
The CSI 300 gauge closed at 4,191.55 points on Monday, down 3.3 percent.
Raising capital for a startup has traditionally been one of the most difficult parts of getting a business off the ground. But times are changing and many Asian startups have become billion-dollar success stories.
In just four years, Xiaomi Corp, China's largest smartphone vendor, became the world's most valuable technology startup with a valuation of more than $46 billion in December.
"Given Asia's high GDP growth and rapidly growing market size, it was natural for investors to look at China and other parts of Asia as places to invest," said Raman Chitkara, who leads the global technology practice at PricewaterhouseCoopers.
"They see the power of Asia?rapidly growing markets, rising new middle class, and growing urbanization?as accelerators for growth and high valuations. There is an entrepreneurial culture in Asia, particularly in China and India, and startups present a certain level of excitement.
"That, plus the potential for economic prosperity by building large-scale value over a short period of time, attracts people to start a business."
Zhongguancun district in Beijing alone gave birth to 49 startups a day last year. The State Administration for Industry and Commerce said nearly 3 million people set up their own businesses for the first time in the nine months from March last year, after China reduced the threshold for those who want to register a business.
At present, China has more than 1,600 technology incubators and hosts more than 1,000 entities investing in startups, with total venture capital exceeding 350 billion yuan ($56 billion).
Early this year, the government decided to set up a new national venture capital fund to help startups and promising entrepreneurs. The $6.5 billion fund will be used to support seed-stage technology startups in the country.
Peng T. Ong, founder of Match.com, the pioneering online dating service set up 20 years ago, recalled his tough days of searching for an investor for his startup business.
"It was harder then," said Ong, who now runs Monk's Hill Ventures, a venture capital firm in Singapore that invests in technology startups in Asia.
"But things have changed dramatically. With more business successes, huge Internet penetration and more mobile telephones, the Asian startup scene is altogether different now."
Flipkart, India's largest retailer by sales, has a success story similar to that of Xiaomi. Now valued at $15 billion, it was started by two friends a few years ago with $6,000 saved from their earnings.
Ma Rui, partner for China at the seed fund and accelerator 500 Startups, said the spectacular success of Internet-based businesses is fueling startup growth.
"Tech entrepreneurship is one of the few ways a talented young person with few resources and dollars can create something that affects millions of people in a fairly short amount of time."
Successful private enterprises are jumping on the bandwagon by developing incubation centers and investing in a growing number of tech startups in the region.
The Internet giant Tencent Holdings Ltd is building a center for technology startups in Chongqing, in partnership with the municipal government. It plans to develop 25 such ideas incubators across the country.
In April, Alibaba Group Holding Ltd announced it would set up a startup incubator for mobile Internet and mobile commerce in the Indian city of Bangalore, and Google has launched its startup incubator Campus Seoul in South Korea.
In India, startups have received some huge investments lately. Based on data compiled by a startup news website, YourStory, in the first quarter of this year 147 deals were put together. Indian startups raised $1.7 billion, registering a 300 percent annual growth. In the first quarter of last year alone, startups in the country raised $450 million. A total of 300 deals were closed last year. Kris Gopalakrishnan, co-founder of Infosys, one of India's biggest IT companies, said most of the investments from global investors or venture capitalists are happening at the seed stage.
"Angel funding typically happens locally," added Gopalakrishnan, who is also chief mentor of Startup Village, a technology business incubator in the southern state of Kerala.
Justin Hall, principal of Golden Gate Ventures of Singapore, said there is now more venture capital in the Asia-Pacific region than at "any other time in recent memory".
"It has had a tremendous catalyzing effect on the formation of new startups, from Singapore to Indonesia. These are exciting times for the sector," added Hall.
Mainland stock markets tumbled in late afternoon trading Thursday as investors cashed in on gains from earlier in the day.
The Shanghai Composite Index fell 3.46 percent or 162.37 points to 4,527.78 points Thursday. The Shenzhen Component Index lost 3.80 percent or 619.87 points to close at 15,692.44 points.
The CSI 300 Index of the biggest companies traded in Shanghai and Shenzhen fell 3.56 percent or 173.61 points to 4,706.52 points.
A total of 1.55 trillion yuan ($249.71 billion) changed hands on the two bourses, up from the previous trading day's 1.49 trillion yuan.
News about the central government's decision to scrap the debt-to-loan ratio for banks sent heavily weighted financial stocks soaring during morning trading, pushing the Shanghai benchmark above the 4,700 point mark by midday.
However, in the afternoon session, banking heavyweights took a hit as cautious investors decided to take some profit, dragging down the Shanghai index.
Despite the good news about the debt-to-loan ratio, the banking sector still suffered losses, indicating weak investor sentiment, New Times Securities said in a note Thursday.
The regulatory approval of a new batch of IPOs may have also contributed to the fragile sentiment.
The China Securities Regulatory Commission said late Wednesday that it has approved 28 new IPOs, which media reports said would freeze more than 1.4 trillion yuan.
The coal and nonferrous metal sectors were among the worst performers Thursday. Gansu Jingyuan Coal Industry and Electricity Power Co, Shaanxi Coal Industry Co, Anhui Jingcheng Copper Share Co and Shenghe Resources Holding Co fell 9.46 percent, 9.04 percent, 9.45 percent and 9.20 percent, respectively.
ChiNext, the country's NASDAQ-style board for high-tech and emerging start-ups, slumped 5.23 percent or 177.02 points to close at 3,206.38 points.
Taiwan's export orders dropped for the second consecutive month to 35.79 billion U.S. dollars for May, down 5.9 percent from a year earlier, according to statistics released by the island's economic authority on Tuesday.
For the first five months of this year, overseas buyers placed orders worth 180.47 billion U.S. dollars with manufacturers in Taiwan, a decrease of 0.6 percent year on year.
Export orders are an indicator of actual exports a month or two later, and Taiwan is known as a big production base for electronics. Taiwanese export orders are, therefore, seen as a key reference for the global electronics sector.
Growth in export orders in May was only recorded in the information and communication sector, with an increase of 2.3 percent year on year, driven by strong demand for hand-held and wearable devices.
The electronics sector, however, posted a decrease of 3.5 percent due to emerging market's weak demand for smart phones and a drop in orders for televisions from Japan, the economic authority said.
In addition, two-digit year-on-year declines in export orders were reported in sectors including precision apparatus, plastic and rubber products, chemicals, base metals, and machinery
The largest orders came from the United States, totaling 9.79 billion U.S. dollars in May, up 5.2 percent from the same period last year, according to the economic authority.
U.S. company teams up with Chinese vendors; analysts say move will boost market position
Qualcomm Inc is setting up a high-end semiconductor research facility with China's top chip makers. This is the United States-based company's biggest move in China after regulators imposed a record $975 million fine on Qualcomm for anti-competitive practices earlier this year.
Semiconductor Manufacturing International Corp, one of the largest chip foundries in the country, will be in charge of the daily operations of the new research center, which will be located in Shanghai, multiple sources told China Daily on Thursday.
Huawei Technologies Co Ltd and Imec, a Belgium-based nano-electronics research center, will also join the collaboration.
The agreement will be announced in the coming days during Belgian King Philippe's visit to China.
"It will be a ground-breaking partnership for Qualcomm, especially as it has not formed such an alliance till now," said a person familiar with the matter. At least three sources, working for the companies involved and for a third-party organization, confirmed the alliance. Qualcomm and SMIC declined to comment. Huawei and Imec were not reachable on Thursday.
It is unclear how Qualcomm will contribute to the partnership, but local vendors are eager to acquire chip design and manufacturing technologies from the world's largest mobile chipmaker. SMIC and Qualcomm are working together on chips made with the 28 nanometer process technology. The Chinese company is eyeing more techniques with higher precision.
Nicole Peng, research director at Canalys China, said any sort of technology transfer will be welcomed by the government as the company continues to remedy its relationship with authorities.
In February, the National Development and Reform Commission fined Qualcomm nearly $1 billion for violating China's antitrust law. But the investigator did not upset its patent licensing model, leaving the California-based company still hugely profitable in the country. China, the world's hub of electronics, accounted for half of its $26 billion in revenue last year.
"This is a good initiative for Qualcomm especially when it wants to consolidate and strengthen its market position in China," Peng said. "Investing in a R&D center can also allow Qualcomm to leverage its local talent pool."
Cisco Systems Inc said on Wednesday it is investing more than $10 billion in China over the next few years, despite a security-concern-led sales slump in the country.
Personal computer vendor Hewlett-Packard Co also sold the majority of its stake in a communications equipment subsidiary last month to a local partner to win more government procurement orders.
China is moving to locally made information technology products over fears that products provided by foreign companies may have security issues. The change in attitude made an array of overseas providers apprehensive that they were being driven out of the world's most vibrant technology market.
Pledging jaw-dropping investments and patent transfer is becoming a common practice for foreign tech companies to show they value the Chinese market and are eager to be part of government-backed IT projects.
Filmmakers insist they have retained their independence despite new investors
In an era of rapid change, it takes only a year for a whisper to grow into a chorus.
This time last year at the Shanghai International Film Festival, Yu Dong of Bona Film Group lamented that all filmmakers in China would eventually become subsidiaries of BAT?short for Baidu, Alibaba and Tencent, the country's triumvirate of Internet giants.
Indeed, this year's festival seems to have been taken over by these outsiders. At a forum called "Big Data: Empowering the Movie Industry", only one of the six panelists was a filmmaker. Xu Zheng, whose 2012 film Lost in Thailand broke the box-office record for a domestic release, is working on a follow-up feature, Lost in Hong Kong.
Alibaba, whose tentacles are all over the movie map, was one of the sponsors of the forum. Late last year, the e-commerce titan increased its stake in Huayi Brothers Media Corp to 8 percent, as did Tencent, making the two the film producer's second-largest shareholders. Early this year, Alibaba paid 2.4 billion yuan ($387 million) for 8.8 percent of Enlight Media, another major film studio, again taking the second-largest shareholder position.
The Internet behemoths have invested heavily in movie-related operations, including crowdfunding and ticketing, but they have yet to show stellar results for movie production.
Some, such as Youku Tudou-affiliated Heyi Pictures, have taken minority stakes in a few titles, but none of them have become runaway hits. Alibaba Pictures has many projects in the pipeline, and it needs a slew of solid winners to establish itself in the content business.
Wang Changtian, Enlight's CEO, said he does not feel he is working for Alibaba founder Jack Ma. "All of our products are designed to satisfy the need of the whole country, so we work for the Chinese film audience," he said.
Bona's Yu Dong, after announcing a 26-picture slate that aims for a total box office return of 10 billion yuan, said he is not ready to decide which Internet giant to work with. "When I hold firm to my own core competency and make good movies, I can fit in with the environment of any of them," he said.
Yu, who is taking his company private because its market capitalization?about 5 billion yuan?is a fraction of the Internet-affiliated rivals such as Huayi, at 79 billion yuan, or Englight, at 73 billion yuan, said that the market is treating his company unfairly for his nonaffiliation with technology leaders.
Meanwhile, Zhang Qiang, CEO of Alibaba Pictures, said he is reassessing the position of his company.
Instead of making it a traditional film production organization, it will use technology to "reshape the business and make it an entertainment company that spans the whole industry chain".
Liu Chunning, CEO of Alibaba Digital Entertainment Group, said: "The Internet raises efficiency with changing technologies while content remains the king. No matter how I hype technology, if I don't produce good movies, people won't go see them."
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