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TOPS NEWS: The newly established China Banking and Insurance Regulatory
Commission held a meeting on Thursday emphasizing that it will help to orderly
lower leverage ratios of companies, break down shadow banking, prevent the
property sector from accumulating bubbles, and help to deal with local
government implicit debts, reported the Securities Times on Friday. The banking
and insurance sector will further reform and open up, the report said.
DATA: China's State Administration of Foreign Exchange on Thursday said
both the current account and non-reserve financial account recorded surpluses in
2017. China's current account surplus fell to $164.9 billion in 2017, equivalent
to 1.3% of GDP, compared with a $196.4 billion surplus in 2016, SAFE said. SAFE
also said the country's foreign-exchange reserves rose by $93 billion in 2017.
The People's Bank of China had previously reported an increase in forex reserves
of $129.4 billion during 2017, but the SAFE figure excludes valuation effect and
is a better gauge of real money flows. SAFE expects the balance of payment to
remain generally stable and the current account to continue to record a surplus
as the global economy continues to revive, the domestic economy operates
steadily, and reform measures deepen.
LIQUIDITY: The PBOC skipped OMO on Friday for the sixth consecutive trading
day, stating that the increasing fiscal expenditure towards month-end would
absorb the impact of maturing reverse repos and keep liquidity conditions at a
"reasonable and stable" level. This resulted in a net drain of CNY30 billion for
the day after maturity of the same amount of reverse repos. CFETS-ICAP's
money-market sentiment index closed at 43 on Thursday, slightly down from 42 on
MONEY MARKET RATES: The 7-day repo average rose to 3.0717% from 2.9406% on
Thursday, after the PBOC net drained CNY30 billion via its open-market
operations. The overnight repo average rose to 2.7779% from Thursday's 2.5570%.
YUAN: The yuan rose against the U.S. dollar after PBOC set a stronger daily
fixing. The yuan rose 0.29% to 6.2690 against the U.S. unit, compared with the
official closing price of 6.2904 yesterday. The People's Bank of China set the
yuan central parity rate vs the U.S. dollar at 6.2881 on Friday, stronger than
Thursday's 6.3046. PBOC has set the fixing stronger for four trading days out of
five this week.
BONDS: The yield on benchmark 10-year China Government Bond was last at
3.7300%, down from the previous close of 3.7550%, according to Wind Information.
STOCKS: The benchmark Shanghai Composite Index closed up 0.26% at 3,168.90.
Hong Kong's Hang Seng Index rose 0.24% to 30,093.28.
FROM THE PRESS: Funding costs in the property sector through bank loans and
bond issuance were between 4% - 5% in 2017, much lower than funding cost via
trusts, which were mostly between 6% - 10% and even as high as 11%, Securities
Daily reported on Friday, according to the annual reports published by listed
property companies. As the funding channels have been restricted, property
companies might seek more funding from trusts, which will push up their funding
costs, the report said.
The PBOC has drained liquidity via its open market operations for eight
consecutive trading days as of Thursday, causing liquidity to tighten slightly
and non-bank financial institutions to face funding pressures, China Securities
Journal reported on Friday. The report cited sources that said at the root of
this problem are banks, which are facing regulation tests at month-end, and are
becoming unwilling to lend out money to those NBFIs. However, as the total
amount of liquidity is not low and the banks' liquidity conditions remain
stable, it is not likely for liquidity to become much tighter, and liquidity
conditions will improve in the beginning of April, the report said.
--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: email@example.com
--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com