China may Establish Credit-Rating Agencies!

Discussion in 'China' started by asianobserve, Dec 26, 2011.

  1. asianobserve

    asianobserve Elite Member Elite Member

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    By Bloomberg News - Dec 25, 2011


    China should reduce its reliance on overseas rating companies by encouraging large financial institutions to strengthen their research and make their own judgments, central bank Governor Zhou Xiaochuan said.

    The nation is also considering establishing credit-rating companies backed by the government, Zhou said at a financial forum in Beijing today. A copy of his speech transcript was posted on financial news portal hexun.com.

    Zhou’s remarks reflect China’s desire to seek alternatives to the top-three global rating companies amid skepticism among officials about the firms’ independence. The nation set up its first rating company that makes investors rather than borrowers pay, called China Credit Rating Co., in September last year.

    "With the rapid expansion in China’s bond market, we need rating companies that are familiar with the Chinese situation," said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank Co., who was rated the nation’s best analyst in 2010 by China Business News newspaper. “We see comments from rating companies during this round of the crisis have influenced the financial market to a large degree. It’s no surprise China is paying attention to them.”

    ‘Beneficial Alliance’

    Overseas rating companies’ earnings models cause “a strong beneficial alliance between the issuer and the ratings agency that cannot avoid influencing the agency’s independence,” said the National Association of Financial Market Institutional Investors in a draft report seen by Bloomberg News last July. The association was formed by the central bank in 2007 to help develop the country’s over-the-counter financial markets.

    One possibility for nurturing local rating companies is to require that a domestic firm also rate a local financial product if one of the international companies does so, said Zhou, the governor of People’s Bank of China. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are the three biggest rating companies.

    Domestic rating firms can play a larger role by researching the finances of local or municipal government, an area in which foreign companies lack expertise, Zhou said.

    The State Council, China’s cabinet, has designated the central bank to regulate the country’s credit-rating companies, making it the sole regulator of the industry, local media reported last week.


    China May Establish Credit-Rating Companies - Bloomberg
     
    Last edited: Dec 26, 2011
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  3. amoy

    amoy Senior Member Senior Member

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    there's already one - Dagong
    Dagong

    Nowadays nobody believes S&P or Fitch are really "neutral" or "objective" or "independent"
     
  4. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Oh, great. Another country I'll be blacklisted in.
     
  5. hbogyt

    hbogyt Regular Member

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    What, did you make a sizeable profit at the expense of somebody? Teach me some of your financial chicanery please. :D
     
  6. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Maxing out credit cards isn't chicanery, it's stupidity. :-(
     
    pmaitra likes this.
  7. asianobserve

    asianobserve Elite Member Elite Member

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    A Chinese credit agency would be the new Chinese wonder weapon. No it will not sink an aircraft carrier but it will sink an economy. This will be economic sabotage of hydrogen bomb proportions. The CCP must be itching to get its fingers into the trigger of this new device... Only problem for them is that nobody will listen at the explosion... :pound:
     
  8. ice berg

    ice berg Senior Member Senior Member

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    Then you have nothing to worry about, right?:confused:
     
  9. pmaitra

    pmaitra Moderator Moderator

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    If I may question, is this for major institutional creditors and debtors or is it for individuals?

    Institutional, in US:

    [​IMG] [​IMG] [​IMG]

    Individual, US:

    [​IMG] [​IMG] [​IMG]
     
    Last edited: Dec 27, 2011
  10. ice berg

    ice berg Senior Member Senior Member

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    Most likely institution based.
    "Zhou’s remarks reflect China’s desire to seek alternatives to the top-three global rating companies amid skepticism among officials about the firms’ independence"
     
  11. asianobserve

    asianobserve Elite Member Elite Member

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    Part of the geopolitical challenge of China. But a credit rating agency made by the Government or regulated by the Government? Looks like a potential WMD...:scared1:
     
  12. amoy

    amoy Senior Member Senior Member

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    Browsing on the homepage of Dagong Global Credit Raing I find this
    Dagong downgrades the sovereign credit rating of the Republic of France Dagong

    It at least provide discreet advice for Chinese investment abroad for her huge foreign reserve :p
     

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