MNI China Daily Summary: Friday, January 11

     TOP NEWS: The China Banking and Insurance Regulatory Commission will

consider new policies to further open up the Chinese market and attract foreign

insurance companies, said China Securities Journal today, citing Xiao Yuanqi,

spokesman of CBIRC. Foreign enterprises are not only welcome to set up branches

and hold money in China, but also encouraged to bring over technology and

talent, Xiao said.

     LIQUIDITY: The People's Bank of China skipped open market operations for a

fifth day on Friday. This resulted in a net drain of CNY110 billion as the same

amount of reverse repos matured, according to MNI calculations. The PBOC drained

a net total CNY410 billion this week. The central bank said liquidity in the

banking system is at a relatively high level.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 2.3825% from Thursday's close of 2.4833%, Wind

Information showed. The overnight repo average decreased to 1.7037% from

Thursday's 1.7311%.

     YUAN: USDCNY appreciated to 6.7482 against Thursday's close of 6.7825. The

PBOC set the yuan's central parity rate against the dollar stronger at 6.7909 on

Friday, compared with 6.8160 on Thursday. Today was the first time since Aug 2

that the yuan parity rate was set below 6.8.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.1200%, down from the close of 3.1300% on Thursday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.74% higher at

2,553.83. Hong Kong's Hang Seng Index rose 0.55% to 26,667.27.

     FROM THE PRESS: China will strictly limit the scope of new expansion

projects producing steel, cement and glass and ban new aluminum smelters as it

tries to maintain efforts to cut excess industrial capacity, Xinhua News Agency

reported late Thursday, citing Miao Wei, Minister of Industry and Information

and Technology.

     Inflation is expected to stay around 2% in 2019 amid an economic slowdown

with sluggish demand and oversupply, the Securities Daily reported today, citing

Pan Xiangdong, chief economist at New Times Securities. The lack of inflationary

pressure will help the central bank be flexible with monetary policy and guide

bond market interest rates lower, the newspaper said citing Liu Dan, analyst at

China Galaxy Securities.

     The PBOC must use targeted easing measures while keeping overall liquidity

at the right level to help small companies, the Securities Daily said in a

commentary today. Policymakers should prevent fast contraction of credit that

may hurt the real economy, while avoiding releasing too much liquidity and

possibly undermining structural reform, the daily said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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