MNI China Daily Summary: Friday, December 6

     BEIJING (MNI) - EXCLUSIVE: China could bring forward planned issuance of

dollar sovereign bonds to provide borrowing benchmarks for Chinese corporate

borrowers and to take advantage of historically low interest rates, policy

advisors and market participants told MNI. The Ministry of Finance sold a record

USD6 billion in bonds in Hong Kong on Nov. 26, after raising EUR4 billion

earlier in the month, in China's first euro-dominated sovereign issuance since

2004. The Chinese government has raised USD11 billion since it restarted dollar

bond sales in 2017, after a 13-year absence from the market.

     TRADE: China is taking steps to exempt some U.S. soybeans, pork and other

unspecified products from tariffs applied in retaliation for the so-called 301

investigation by the U.S., according to a statement issued on Friday on the

website of the Ministry of Finance.

     LIQUIDITY: The People's Bank of China (PBOC)injected CNY300 billion via

one-year medium-term lending facility (MLF). The injection was CNY112.5 billion

more than the amount of MLF which matured today, PBOC said. The MLF rate was

kept unchanged at 3.25%. The central bank skipped conducting reverse repos for

the 13th consecutive day, according to a statement on the PBOC website.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) increased to 2.3671% from Thursday's close of 2.3142%, Wind

Information showed. The overnight repo average rose to 2.0706% from Thursday's

1.9024%.

     YUAN: The currency strengthened to 7.0340 against the dollar from

Thursday's close of 7.0425. PBOC set the dollar-yuan central parity rate lower

at 7.0383, compared with Thursday's 7.0521. This 138 bps daily gain is the

largest since Nov. 6.

     YUAN: The yuan may trade in the range of 7.00 to 7.10 against the U.S.

dollar in December supported by countercyclical policies to reach the growth

target, the China Securities Journal reported citing HY Investment. The currency

is likely to gradually appreciate next year, given improved market sentiment and

economic fundamentals, and with the interest rate spread between China and the

U.S. 10-year government bonds remaining high as both countries are cautious

about monetary easing, the newspaper said citing Ping An Securities.

     BONDS: The yield on 10-year China Government Bonds was last at 3.2050%, up

from Thursday's close of 3.1875%, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.43% to 2,912.01, helped by

the rally of domestic chip, video game and block chain shares. Hong Kong's Hang

Seng Index rallied 1.03% to 26,487.17.

     FROM THE PRESS: The PBOC should balance stable growth, structural reforms

and risk prevention to reduce economic fluctuations, wrote Guan Tao, a former

official at the State Administration of Foreign Exchange in the China Securities

Journal. PBOC should also increase countercyclical adjustments and resolve the

risks in the reform process, avoid zero-interest rates or quantitative easing,

said Guan.

     Chinese developers are still able to obtain capital, contrary to media

reports that overstated their financing difficulties, the Securities Daily

reported citing Zhang Dawei, chief analyst at Centaline Property. Dollar bonds

issued by developers will reach a record this year, with 50% increase y/y to $65

billion in the first 11 months, although government quotas limit the increase,

the newspaper said. 

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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]