MNI 5 Things: Faster Capital Drain as China Banks Sell More FX

     BEIJING (MNI) - Chinese banks sharply increased selling of foreign exchange

on behalf of their clients in November, indicating capital outflows accelerated

under a weakening yuan and concerns over a slowing economy and trade conflicts

with the U.S. 

     The following are key takeaways from data released by the State

Administration of Foreign Exchange on late Thursday.

     --Banks sold net CNY139.4 billion worth of FX on behalf of their clients.

This compared with CNY24.1 billion in October. The number is a key indicator of

capital flows in and out of the country. The greater the net sales number, the

larger the outflow.

     --In terms of forward contracts, banks were net forex purchasers on behalf

of their clients in November, suggesting market participants were betting on a

stronger yuan in the longer term. Banks' net purchases of forex forward

contracts totaled CNY31.9 billion, compared with CNY19.1 billion in October.

     --Banks' total net forex sales, including both transactions with clients

and banks' proprietary trading desks, rose to net CNY124.1 billion in November

from CNY20.3 billion in October. In Jan-Nov, banks sold net total CNY341.2

billion to clients.

     --Bank's net purchases of forex forward contracts in November provided

US$11.2 billion of foreign exchange to meet the market's needs, Wang Chunying,

spokeswoman of SAFE, said in a statement.

     --China's forex purchase position on the central bank's balance sheet fell

CNY57.13 billion in November, indicating capital outflow pressure as yuan

weakens.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

[TOPICS: MAQDS$,MAUDR$,MAUDS$,M$A$$$,M$Q$$$,M$U$$$]