Money

Assets exchange boosts finance reputation

By Shen Jingting (China Daily)
Updated: 2010-05-31 07:52

The first national financial assets trading platform - Beijing Financial Assets Exchange (BFAE) - is scheduled to start operating on Monday, showing the city's ambition to build a world-class financial center.

The exchange is set to play a vital role in non-performing assets disposal and equity transfers of financial companies.

It will also provide a transaction platform for credit assets and trust products, and offer services for private equities ranging from raising money to exiting deals.

The exchange is open to parties from China and abroad.

Ji Lin, executive vice-mayor of Beijing, said BFAE is part of the capital's strategy to build a world-class city.

"If we look at cities such as New York and London, they are, without exception, international or regional financial centers," Ji said.

"The establishment of BFAE indicates that Beijing is a step closer to becoming a financial center with international influence."

Ji said BFAE complies with the international trend of standardizing financial transaction processes, ensuring liquidity and heeding market risks.

Huo Xuewen, Party secretary of the Beijing Financial Work Bureau, said conditions for building a national financial trading platform in Beijing are ripe.

"At the end of last year, the financial assets stock in China reached 130 trillion yuan and Beijing owned more than half, of that," Huo said.

"The financial industry has developed into a pillar industry for Beijing, accounting for 14.3 percent of total GDP."

Banks in Beijing hold 80 percent of the nation's total banking capital, Huo said.

Several companies, including China Beijing Equity Exchange (CBEX), China Everbright Investment Management and China Cinda Asset Management, have invested 300 million yuan with BFAE.

Xiong Yan, president of CBEX, the largest independent stakeholder, is also the president of BFAE.

"The current business of BFAE is directly taken from CBEX, as the latter has cooperated with the four major State-owned assets management companies and conducted non-performing financial asset trading since 2008," Xiong said.

The business now needs to expand to other fields, such as credit assets and insurance, Xiong said.

"China has become the biggest currency issuer around the world, but currency efficiency is still low," he said

Xiong said that last year, China issued the equivalent of $9 trillion, and produced a GDP of less than $5 trillion. The United States issued $8.3 trillion last year and achieved a GDP of $15 trillion.

"It demonstrates the liquidity in China is not enough," Xiong said.

The development of Beijing's financial market is also still in its infancy, he said.

He said BFAE will shoulder the responsibility to lift the mobility of assets by providing a full range services.