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E-MINI S&P (U1): Northbound

     TOP NEWS: 
     POLICY: China, faced with increasing economic headwinds, will broadly cut
taxes and fees, allow local government to increase special bond issuances,
continue pursuing proactive fiscal policy as well as prudent monetary policy
next year, Xinhua Hua News agency said Friday following the Central Economic
Work Conference in Beijing. 
     LIQUIDITY: Traders across China's financial markets do not expect any
concerted easing by the People's Bank of China (PBOC), despite this week's flood
of liquidity provision, as concern over currency depreciation remains to the
fore, the latest MNI China Liquidity Survey found. Despite this week's restarted
PBOC open market operations, the survey saw liquidity remaining tight ahead of
the approaching calendar year-end in both the west and China, as banks' dress up
their balance sheets to prepare for year-end regulatory requirements. "Liquidity
is tight now, as big banks are reluctant to lend short-term capital due to the
usual seasonal factors," said a trader at a commercial banks in Shanghai. The
tight conditions were reflected in the latest liquidity survey, with 77.8% of
traders seeing liquidity as tighter that last month, the most since Aug 2017 and
up from just 17.6% who saw tighter conditions last month.
     LIQUIDITY: The PBOC injected CNY30 billion via 7-day reverse repos, and
CNY20 billion through 14-day reverse repos today, adding liquidity for a fifth
straight trading day. It resulted in a net injection of CNY50 billion, as no
reverse repos mature today, according to Wind Information. The central bank said
this is to partly offset the maturity of treasury's cash deposit at commercial
banks and other factors.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.5800% from Thursday's close of 2.6374%, Wind
Information showed. The overnight repo average decreased to 2.4514% from
Thursday's 2.5544%.
     YUAN: The yuan depreciated against the dollar, as USDCNY increased to
6.9019 against Thursday's close of 6.8970. The PBOC set the dollar/yuan central
parity rate at 6.8825 Friday, as the yuan strengthened from Thursday's 6.8936.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.3200%, up from the close of 3.3050% on Thursday, according to Wind
     STOCKS: The benchmark Shanghai Composite Index closed 0.79% lower at
2,516.25. Hong Kong's Hang Seng Index increased 0.51% to 25,753.42.
     FROM THE PRESS: Policymakers should advance capital market reform based on
the economic situation, and stabilize growth while promoting reform, the
Securities Daily said in a commentary piece today. The comments came after the
PBOC commented Thursday about accelerating market reform. The government should
avoid a collision between reform measures and the growth target as they look to
pursue a win-win outcome, the Daily said. In the long-term, capital market
reform should boost the business environment, the main infrastructure to
stabilizing growth, the newspaper said.
     More financial activities should come under the scope of the central bank's
macro-prudential management, the Financial News said today. Macro-prudential
policies play a leading and key role in controlling systemic risks, as they can
regulate the entire financial sector and the whole financial market via
counter-cyclical and cross-market regulations, the PBOC-run newspaper said,
citing Lian Ping, chief economist at Bank of Communications.
     Strict regulation on the housing market will likely continue next year
under the long-term tone of "housing is for living not speculation", the China
Securities Journal said today. Purchase or sales limits, as well as loan
restrictions, are unlikely to be removed, the newspaper said. The housing market
will likely enter a downturn, though indicators like real estate investment, new
housing projects, land transaction volumes, and developers' funding are still in
positive territory. Sales are showing significant pressure and house prices will
continue to fall, the paper said citing Chen Cong, analysts at CITIC Securities.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
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