Trial now



Fiscal Fears Return To Pressure BRL


2-, 3Y Midcurve Puts


Couple of structures

     TOP NEWS: The People's Bank of China (PBOC) is attempting to boost lenders'
credit standing by backing up their issuance of  perpetual bonds, according to
Huang Yiping, a former member of the PBOC monetary policy committee. Selling
perpetual bonds that can be swapped for central bank bills will encourage banks
to replenish capital, diversify bond products, improve capital pricing and
transmission of monetary policies, People's Daily reported citing Huang, who is
the deputy director of the National School of Development at Peking University.
     POLICY: China's overall bond market continues to grow in terms of the
number of bonds issued and trading volume, with falling yield curve and more
diversified investors, the PBOC said in Financial Market Operation 2018. Money
market rates declined and repo transactions increased moderately, it said.
Indices and turnover of the two stock exchanges both declined, the PBOC said. 
     DATA: China issued total CNY3.5 trillion China government bonds and CNY4.2
trillion local government bonds last year, compared with CNY3.9 trillion CGB and
CNY4.4 trillion LGB in 2017, the PBOC said today. 
     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a fifth day,
net draining CNY10 billion given the amount of reverse repos maturing today,
adding total drained this week to CNY770 billion, Wind Information said. The
liquidity in the banking system is relatively high as the 0.5% reserve
requirement ratio cut takes effect, the PBOC said. 
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.5726% from Thursday's close of 2.5715, Wind
Information showed. The overnight repo average increased to 2.3518% from
Thursday's 2.2651%. 
     YUAN: The yuan appreciated against the dollar to 6.7640 from Thursday's
close of 6.7945. The PBOC set the yuan central parity rate at 6.7941, compared
with 6.7802 on Thursday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.1600%, up from the close of 3.1400% on Thursday, according to Wind
Information. STOCKS: The benchmark Shanghai Composite Index closed 0.39% higher
at 2,601.72. Hong Kong's Hang Seng Index rose 1.65% to 27,569.19. 
     FROM THE PRESS: PBOC's move to allow banks sell perpetual bonds backed by
CBS is expected to drive more than CNY4 trillion credit growth, China Securities
Journal reported today, citing analysts from Minsheng Securities. Assuming that
the net capital of commercial banks will reach 5% after the issuance, banks may
receive CNY4.24 trillion credit by the third quarter next year, the newspaper
     China's electric vehicle market is suffering from overcapacity, with
current capacity too scattered in different areas, Sina Finance reported today,
citing Lin Boqiang, director of the China Institute for Studies in Energy
Policy. There are about 250 registered electric carmakers in China but only 10
may be sufficient, Lin said according to Sina. The government should actively
prevent large-scale buildup of capacity and overproduction, Lin was cited as
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]