STOCK MARKET WATCH -- Friday, 30 August 2013

[Demeter]

7. China to expand credit asset securitization pilot program

TURN BACK, O MAN, FORESWEAR THY FOOLISH WAYS

http://www.reuters.com/article/2013/08/28/us-china-economy-securitisation-idUSBRE97R0HA20130828

China will expand a pilot program for securitizing credit assets, state radio cited the State Council as saying on Wednesday, as the government looks for ways to clean up bad debt. The council, China's cabinet, decided at a regular meeting to steadily push ahead with the pilot scheme, with the precondition that risk would be strictly controlled.

It said high quality asset-backed securities (ABS) products could be traded on the stock exchange to provide more investment options for investors. High risk assets will be excluded from the pilot program. It did not elaborate on what specific kinds of assets would be in the pilot program.

China relaunched a program to develop ABS last year after it was interrupted by the 2008-2009 financial crisis, but progress has been slow.

The central bank had said earlier this year that it would push forward asset securitization. The government has been trying to rein in rapid credit growth amid concerns over a rise in bad debts.