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Corrective Cycle

     BEIJING (MNI) - TOP NEWS: President Xi Jinping urged the U.S. to calmly
assess the epidemic situation and respond reasonably to the novel coronavirus
outbreak in a phone call to his counterpart Donald Trump, Xinhua New Agency
reported. Trump said the U.S. is willing to work with China to implement the
phase one trade deal signed last month and jointly advance bilateral relations,
according to Xinhua. 
     POLICY: The People's Bank of China (PBOC) will prioritise growth over other
monetary policy targets as the coronavirus adds to the challenges facing an
already slowing economy, Vice Governor Pan Gongsheng told reporters Friday,
stressing the central bank has a "very sufficient toolbox".
     DATA: China's forex reserves at the end of January was valued 0.2% higher
than a month ago to $3.1155 trillion, data by the State Administration of
Foreign Exchange (SAFE) on Friday showed. The increase was mainly due to a gain
in the dollar index and prices of major government bonds amid the China-U.S.
trade deal, Brexit, and the coronavirus outbreak, according to SAFE. The yuan
gained 1.27% against the U.S. dollar in January, Wind data showed. 
     LIQUIDITY: The PBOC skipped open market operations for the third day,
leaving liquidity unchanged, according to Wind Information. Total liquidity is
sufficient to meet market demand, the PBOC said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.1174% from Thursday's close of 2.2092%, Wind
Information showed. The overnight repo average fell to 1.6924% from 1.7198% on
     YUAN: The currency weakened to 6.9860 against the dollar from 6.9696 on
Thursday. PBOC set the dollar-yuan central parity rate lower for the first time
in seven trading days at 6.9768, compared with Thursday's 6.9985.
     YUAN: The PBOC plans to issue CNY30 billion offshore bills in Hong Kong on
Feb. 13 to "enrich high credit rating yuan products and improve yuan yield
curve," it said on its website today. Included are CNY20 billion 3-month tranche
and CNY10 billion 1-year tranche issues, according to the statement.
     BONDS: The yield on 10-year China Government Bonds was last at 2.8275%,
down from Thursday's 2.8600, according to Wind Information.
     STOCKS: The Shanghai Composite Index edged up 0.33% to 2,875.96. Hong
Kong's Hang Seng Index lost 0.33% to 27,404.27.
     FROM THE PRESS: The PBOC will conduct more than CNY30 billion in rediscount
operations this year, including CNY1 billion in Q1 with 80% of the capital
raised supporting small businesses, the China Securities Journal citing unnamed
sources from PBOC. The PBOC requires interest rates on loans to companies
participating in epidemic management to be lower than 3.15%, the newspaper said.
     Private companies in Hubei province, the centre of the coronavirus
epidemic, are not facing significant debt pressures as most bonds issued are by
local government financing vehicles (LGFV), the Shanghai Securities Journal
reported citing several securities firms. About CNY41.32 billion, or 11% of the
total LGFV bonds, in Hubei mature this year, the journal said. Policy supports
to add market liquidity and ease financing issues will help dispel investor
doubts, it said.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]