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Free AccessMNI China Daily Summary: Friday, January 7
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via seven-day reverse repos with the rate unchanged at 2.2% on Friday. This operation has drained net CNY100 billion after offsetting the maturity of CNY110 billion reverse repos, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0483% from the close of 1.9310% on Thursday, Wind Information showed. The overnight repo average rose to 1.8261% from the previous 1.7014%.
YUAN: The currency strengthened to 6.3739 against the dollar from 6.3761 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.3742, compared with 6.3728 set on Thursday.
BONDS: The yield on the 10-year China Government Bond was last at 2.8600%, up from 2.8575% of Thursday's close, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.18% to 3,579.54, while the CSI300 rose 0.09% to 4,822.37. The Hong Kong's Hang Seng Index gained 1.82% to 23,493.38.
FROM THE PRESS: The Chinese yuan in 2022 will be largely dependent on the outlook of the country's exports, which may continue to be supported if the pandemic hinders recoveries of overseas economies, the Economic Daily reported citing Guan Tao, a former forex official. Guan also noted that the Federal Reserves may hike interest rates earlier than expected, while China still has room for easing given tamed inflation, though this may lead to narrowed China-U.S. interest rate spread and a weaker yuan, the newspaper said.
China should introduce countercyclical policies as soon as possible, as the simultaneous decline in economic growth and inflation starting from December 2021 may last up to a year without sufficient stimulus, said 21st Century Business Herald in a commentary. The cooling real estate sector has brought about a rapid economic slowdown, restrained industrial products prices, and dampened credit-based liquidity, the newspaper said. Net exports may weaken as major economies turn to monetary tightening, while high-end manufacturing and new energy are not enough to be the main driver, the newspaper said.
China will carry out timely pro-growth policies to keep the economy operating within a reasonable range, wrote He Lifeng, director of National Development and Reform Commission in a CPC-run magazine. The ministry will focus on expanding domestic demand, accelerating debt issuances to fund infrastructure projects, wrote He. The government will create a sound economic and social environment ahead of the 20th National Party Congress this year, wrote He.
China may need a total investment of CNY150-300 trillion to achieve its carbon emission peak and neutrality goals, so it requires many domestic and foreign investors to participate in the country’s green financial market, wrote Liu Guiping, vice governor of the People’s Bank of China in an article published on the PBOC-run magazine China Finance. The central bank will promote green finance in the Guangdong–Hong Kong–Macau Greater Bay Area by encouraging domestic and overseas green banks, securities and funds to set up headquarters for green business in the areas, as well as facilitating interconnection of the financial markets, wrote Liu.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.