MNI China Daily Summary: Friday, November 1
EXCLUSIVE: Electricity usage from China’s industrial base will likely remain below the sector’s H1 6.9% y/y growth rate in the second half, due to high-base effects and a slowdown in demand from energy-intensive industries, but overall power consumption is expected to exceed 2023’s 6.7% gain due to higher household usage, local analysts and economists have told MNI.
DATA: China's Caixin manufacturing PMI registered 50.3 in October, up from September’s 49.3, rising back to the expansionary zone above the 50 mark, the financial publisher said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY17.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY275.5 billion after offsetting maturities of CNY292.6 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5508% from 1.7044% on Thursday, Wind Information showed. The overnight repo average decreased to 1.3428% from 1.3708%.
YUAN: The currency weakened to 7.1250 against the dollar from 7.1160 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1135 on Friday, compared with 7.1250 on Thursday. The fixing was estimated at 7.1250 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.1425%, up from Thursday's close of 2.1290%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was down 0.24% to 3,272.01, while the CSI300 index edged down 0.03% to 3,890.02. The Hang Seng Index rose 0.93% at 20,506.43.
FROM THE PRESS: China’s PMI will likely remain within expansionary territory for the remainder of Q4, after reaching 50.1 in October, the first time above the breakeven handle in five consecutive months, experts interviewed by 21st Century Business Herald said. The government’s incremental policies will ease insufficient demand during the final quarter, the experts added. Wen Tao, an analyst at the China Logistics Information Center, noted October’s PMI result was traditionally lower than in September, highlighting the effectiveness of recent macro policies in stabilising growth.
China’s stock market is likely to continue rising should institutional funds increase investment once additional policies are fully implemented and price signals verified, China Securities Journal reported, citing Qin Peijing, chief strategy analyst at CITIC Securities. The total transaction volume of the A-share market reached CNY36.26 trillion, a monthly record high and up from CNY15.14 trillion in September, the newspaper noted. People’s Bank of China data showed overseas investors held CNY3.13 trillion in Chinese stocks in September, rising CNY658 trillion from August and exceeding CNY3 trillion for the first time since Oct 2023.
European firms are increasingly optimistic regarding China’s economy, according to the China Council for the Promotion of International Trade, noting their October survey showed 41.67% of enterprises believed China's 2024 market prospects were good, up 14.17 percentage points m/m. Sun Xiao, spokesperson for the Council, noted 20% of foreign firms planned to increase investment in China, up 2.07 pp m/m, with companies from Europe rising 2.5 pp. Nearly 50% of foreign-invested enterprises said China's attractiveness had recently increased, up 2.04 pp from the previous month, Sun added.