China should reduce its reliance on overseas ratings companies by encouraging large financial institutions to strengthen their research and make their own judgements, People’s Bank of China Governor Zhou Xiaochuan (周小川) said.
The nation is also considering establishing credit-rating companies backed by the government, Zhou said at a financial forum in Beijing yesterday. 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 ratings companies amid skepticism among officials about the firms’ independence.
The nation set up its first ratings 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 ratings companies that are familiar with the Chinese situation,” said Lu Zhengwei (魯政委), Shanghai-based chief economist at Industrial Bank Co, who was rated the nation’s best analyst last year by China Business News newspaper. “We see comments from ratings 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.”
Overseas ratings 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 in 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 ratings companies is to require that a domestic firm also rates a local financial product if one of the international companies does so, Zhou said.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are the three biggest ratings companies.
Domestic ratings firms can play a larger role by researching the finances of local or municipal government, an area in which foreign companies lack expertise, he 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.
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
MAJOR CONTRIBUTOR: Revenue from AI servers made up more than 50 percent of Wistron’s total server revenue in the second quarter, the company said Wistron Corp (緯創) on Tuesday reported a 135.6 percent year-on-year surge in revenue for last month, driven by strong demand for artificial intelligence (AI) servers, with the momentum expected to extend into the third quarter. Revenue last month reached NT$209.18 billion (US$7.2 billion), a record high for June, bringing second-quarter revenue to NT$551.29 billion, a 129.47 percent annual increase, the company said. Revenue in the first half of the year totaled NT$897.77 billion, up 87.36 percent from a year earlier and also a record high for the period, it said. The company remains cautiously optimistic about AI server shipments in the third quarter,
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said its materials management head, Vanessa Lee (李文如), had tendered her resignation for personal reasons. The personnel adjustment takes effect tomorrow, TSMC said in a statement. The latest development came one month after Lee reportedly took leave from the middle of last month. Cliff Hou (侯永清), senior vice president and deputy cochief operating officer, is to concurrently take on the role of head of the materials management division, which has been under his supervision, TSMC said. Lee, who joined TSMC in 2022, was appointed senior director of materials management and
ELECTRONICS: Strong growth in cloud services and smart consumer electronics offset computing declines, helping the company to maintain sales momentum, Hon Hai said Hon Hai Precision Industry Co (鴻海精密) on Saturday announced that its sales for last month rose 10 percent year-on-year, driven by strong growth in cloud and networking products amid the ongoing artificial intelligence (AI) boom. The company, also known internationally as Foxconn Technology Group (富士康科技集團), reported consolidated sales of NT$540.24 billion (US$18.67 billion) for the month, the highest ever for the period, and a 10.09 percent increase from a year earlier, although it was down 12.26 percent from the previous month. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said its cloud
RSS