MNI China Daily Summary: Friday, Jan 26

POLICY: China is confident in meeting Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) standards, seeing conditions in 2024 as "ripe" for Beijing's accession to the trading block, according to Wang Shouwen, answering an MNI question at a press conference.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY461 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The reverse repo operation has led to a net injection of CNY390 billion reverse repos after offsetting CNY71 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9517% from 1.9405%, Wind Information showed. The overnight repo average decreased to 1.8118% from the previous 1.8477%.

YUAN: The currency weakened to 7.1808 against the dollar from 7.1679 on Thursday. The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1074, compared with 7.1044 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.4930%, down from 2.5000% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.14% to 2,910.22 while the CSI300 index fell 0.27% to 3,333.82. The Hang Seng Index was down 1.60% to 15,952.23.

FROM THE PRESS: Authorities should improve delisting standards to avoid issues such as speculation on “junk stocks”, said Tian Lihui, dean of Nankai University's Institute of Finance and Development. Measures should include strengthening requirements on financial indicators and corporate governance, Tian added. The China Securities Regulatory Commission said recently that policy will focus on strengthening the capital market and prioritising investors. Market insiders said the potential for improving the delisting system is large, as delisting enforcement remains weak, with companies able to avoid delisting through reorganisation and changing control rights. (Source: 21st Century Business Herald)

Chinese companies are concerned by the EU’s plans to tighten FDI screening and economic security, according to the Chinese Chamber of Commerce in the EU. In total, 47% of member firms raised concern, with the chamber expecting business and investment confidence to be lower in the future. The chamber hoped the EU would ensure global supply chain stability, respect the global division of labour and avoid generalizing the "risk-reduction" strategy with the broader industrial sector.

Land sale revenue this year will likely remain flat or increase slightly from 2023 given the low base level set during the past two years. Regional disparities will increase, with some provinces expecting double-digit revenue growth, while others decline. Local governments can drive sustainable local fiscal revenue growth by promoting smooth real estate market operations, improving business environment, upgrading industry, and attracting population inflow, said Luo Zhiheng, chief economist of Yuekai Securities. Land sales revenue totaled CNY4.2 trillion in the first eleven months of 2023, a fall of 17.9% y/y.