China's stock markets slumped to their lowest level in 32-months Thursday. The fall was blamed initially on sliding metal futures, followed by a sell-off in shares of SMEs and high-tech companies, state media reported. The benchmark Shanghai Composite Index, grouping foreign-currency B shares and yuan-denominated A shares, dropped 3.88% to finish at 1332.94 points. Meanwhile the Shenzhen Composite Index suffered an even greater fall, dropping 4.99% to close at 355.60 points. Several big companies saw their share prices fall to hit their 10% daily limits.

The China Banking Regulatory Commission, the banking industry's national regulator, is aiming to bring its practices up to international standard within five years a leading official has said. Tang Shuangning, vice-chairman of the CBRC, said the move would help bring stability to China's banking sector. He said the CBRC would aim to meet the Core Principles for Effective Banking Supervision by the Basel Committee, which formulates industry criteria for the world's banking sector, by 2009. "Rivalry from foreign banks will increasingly intensify after 2006, and the trend of economic and financial globalization will further amplify the banking risk in China," state media quoted Tang as saying. "China's banking supervision is facing a more complicated situation."

ABN AMRO Holding, Credit Suisse First Boston and ING are planning to become the first overseas banks to offer derivatives to Chinese companies. The three banks have all been licensed to trade derivatives and could start business before the end of October. Allowing banks to trade derivatives enables Chinese companies to hedge currency and other risk. According to the Shanghai-based China Foreign Exchange Center, Chinese banks traded a record $151.1 billion of currencies in 2003 and accounted for 7% of global trade. In total to date. Ten overseas banks have been licensed to trade derivatives in China; another 10 have are awaiting approval.

Online travel firm eLong Inc plans to raise up to US$59 million in the latest NASDAQ IPO by a Chinese firm, state media reported. The company is looking to follow rival Ctrip.com, whose shares are up 117% from their December NASDAQ listing which raised US$75.6 million. According to the China National Tourism Administration, China's travel industry was worth US$47 billion in 2002, although the sector is highly fragmented among 11,500 travel agencies. Loss-making eLong is the latest Chinese online firm to look to US investors to fund growth. In September Chinese online recruitment firm 51job Inc. raised US$73.5 million in a NASDAQ IPO.

The Netherlands', biggest bank, ABN AMRO, and Galaxy Securities, China's largest brokerage firm, announced plans to set up a futures trading unit at the beginning of 2005. The venture would be the first by an overseas bank in China. According to the China Securities Regulatory Commission, China's futures market is limited to commodity trading on three exchanges in Dalian, Shanghai and Zhengzhou. However, the commission said it plans to expand trading to stock index futures and Chinese government bond futures and ABN AMRO executives said they expected that to happen in the next 12 months to 18 months. The venture is being negotiated under the terms of the Closer Economic Participation Agreement signed between Hong Kong and China last year. Under its terms overseas companies will be allowed to own as much as 49% of a Chinese futures venture from January 1.