MNI China Daily Summary: Friday, December 29

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY195 billion via 7-day reverse repos, with rates unchanged at 1.80%. The operation led to a net injection of CNY155 billion after offsetting CNY40 billion in maturities, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.9079% from 2.0193% on Thursday, Wind Information showed. The overnight repo average rose to 1.6533% from 1.3796%.

YUAN: The currency strengthened to 7.0920 against the dollar from 7.1055 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.0827, compared with 7.0974 set on Thursday. The fixing was estimated at 7.1113 by a Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.5950%, down from Thursday's close of 2.6025%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.68% to 2,974.93 while the CSI300 Index increased 0.49% to 3,431.11. Hang Seng Index edged up 0.02% to 17,047.39.

FROM THE PRESS: The PBOC said it will step up macroeconomic policy adjustments to support the economy and promote a rebound in prices, following a quarterly meeting of its monetary policy committee, according to a statement published on Thursday on the PBOC website. It will implement prudent monetary policy, and focus on counter- and cross-cyclical adjustments to expand domestic demand and boost confidence. The central bank will stabilise expectations on the currency by correcting procyclical behavior and guarding against overshooting risks.

China’s economic growth may fall to between 4-5% in 2024, and could struggle to reach 5%, due to insufficient demand, said Zhang Junkuo, former deputy director of the Development Research Center of the State Council. The real-estate market will find a rebound challenging without a new development model, which will continue to drag down fixed-asset investment, while the recovery of consumer demand requires a gradual improvement of the economic and employment situation. Authorities must enhance support policies and promote reform and opening up in key areas such as establishing a unified urban and rural construction land market, said Zhang. (Source: 21st Century Business Herald)

Foreign investment remains at historically high levels, with the actual use of foreign capital reaching CNY1.04 trillion in the first 11 months of the year, said Ministry of Commerce spokesperson He Yadong at a weekly presser on Thursday. It is normal for this year’s growth rate to fluctuate, given the high base of the same period last year when foreign capital use reached a high of CNY1.16 trillion in the Jan-Nov period, said He. Many multinationals have come to China since the beginning of this year with 48,000 foreign-invested enterprises newly established across the country, a rise of 36.2% y/y, according to He. (Source: Securities Daily)